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What changed in Broadcom's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Broadcom's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+332 added−308 removedSource: 10-K (2023-12-14) vs 10-K (2022-12-16)

Top changes in Broadcom's 2023 10-K

332 paragraphs added · 308 removed · 250 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

57 edited+13 added−11 removed83 unchanged
Biggest changeHe held several executive leadership positions at Integrated Circuit Systems, Inc., a publicly traded timing solutions IC company, including President and Chief Executive Officer from 1999 until its acquisition by Integrated Device Technology, Inc. in 2005, Chief Operating Officer from 1996 to 1999 and Senior Vice President and Chief Financial Officer from 1995 to 1999.
Biggest changeKawwas, Ph.D. 53 President, Semiconductor Solutions Group Hock E. Tan has served as our President and Chief Executive Officer since March 2006. He was President and Chief Executive Officer at Integrated Circuit Systems, Inc. (“ICS”), a publicly traded timing solutions IC company, from 1999 until its acquisition by Integrated Device Technology, Inc. in 2005.
Examples of these materials used in our products are gallium arsenide (“GaAs”) and indium phosphide (“InP”). We provide semiconductor solutions for managing the movement of data in data center, service provider, enterprise and embedded networking applications. We provide a broad variety of RF semiconductor devices, wireless connectivity solutions, custom touch controllers and inductive charging solutions for the wireless market.
Examples of these materials used in our products are gallium arsenide (“GaAs”) and indium phosphide (“InP”). We provide semiconductor solutions for managing the movement of data in data center, service provider, and enterprise networking applications. We provide a broad variety of RF semiconductor devices, wireless connectivity solutions, custom touch controllers and inductive charging solutions for the wireless market.
The majority of our front-end wafer manufacturing operations is outsourced to external foundries, including Taiwan Semiconductor Manufacturing Company Limited (“TSMC”). We use third-party contract manufacturers for a significant majority of our assembly and test operations, including Advanced Semiconductor Engineering, Inc., Foxconn Technology Group, Amkor Technology, Inc. and Siliconware Precision Industries Co., Ltd.
The majority of our front-end wafer manufacturing operations is outsourced to external foundries, including Taiwan Semiconductor Manufacturing Company Limited (“TSMC”). We use third-party contract manufacturers for a significant majority of our assembly and test operations, including TSMC, Advanced Semiconductor Engineering, Inc., Foxconn Technology Group, Amkor Technology, Inc. and Siliconware Precision Industries Co., Ltd.
We compete based on our breadth of portfolio of enterprise management tools, breadth and synergy of offerings, our platform and hardware independence, our global reach, and our deep customer relationships and industry experience. Intellectual Property Our success depends in part upon our ability to protect our IP.
We compete based on the breadth of our enterprise management tools portfolio, breadth and synergy of offerings, our platform and hardware independence, our global reach, and our deep customer relationships and industry experience. Intellectual Property Our success depends in part upon our ability to protect our IP.
ITEM 1. BUSINESS Overview We are a global technology leader that designs, develops and supplies a broad range of semiconductor and infrastructure software solutions. Our over 50-year history of innovation dates back to our diverse origins from Hewlett-Packard Company, AT&T, LSI Corporation, Broadcom Corporation, Brocade Communications Systems LLC, CA, Inc. and Symantec Enterprise Security.
ITEM 1. BUSINESS Overview We are a global technology leader that designs, develops and supplies a broad range of semiconductor and infrastructure software solutions. Our over 50-year history of innovation dates back to our diverse origins from Hewlett-Packard Company, AT&T, LSI Corporation, Broadcom Corporation, Brocade Communications Systems LLC, CA, Inc., Symantec Enterprise Security, and VMware, Inc. (“VMware”).
We are also enabling service providers in deploying High Efficiency Video Coding (“HEVC”), a video compression format that is a successor to the H.264/MPEG-4 format. HEVC enables ultra-high definition (“Ultra HD”), services by effectively doubling the capacity of existing networks to deploy new or existing content.
We are also enabling service providers in deploying High Efficiency Video Coding (“HEVC”), a video compression format that is a successor to the H.264/MPEG-4 format. HEVC enables ultra-high definition (“Ultra HD”), services by effectively doubling the capacity of 4 Table of Contents existing networks to deploy new or existing content.
Major End Markets Major Applications Material Product Families Broadband • STB and Broadband Access • STB SoCs • DSL/PON gateways • DOCSIS cable modem • DSLAM/PON optical line termination • Wi-Fi access point SoCs Networking • Data Center, Service Provider, Enterprise and Embedded Networking • Ethernet switching and routing merchant silicon • Embedded processors and controllers • Custom silicon solutions • Optical and copper PHYs • Fiber optic transmitter and receiver components Wireless • Mobile Device Connectivity • RF front end modules and filters • Wi-Fi, Bluetooth, GPS/GNSS SoCs • Custom touch controllers • Inductive charging ASICs Storage • Servers and Storage Systems • SAS and RAID controllers and adapters • PCIe switches • Fibre channel host bus adapters • Ethernet NIC • HDD and SSD • Read channel based SoCs; Custom flash controllers • Preamplifiers Industrial • Factory Automation, Renewable Energy and Automotive Electronics • Optocouplers • Industrial fiber optics • Motion control encoders and subsystems • Light emitting diode • Ethernet PHYs, switch ICs and camera microcontrollers Set-Top Box Solutions: We offer complete SoC platform solutions for cable, satellite, Internet Protocol television, over-the-top and terrestrial STBs.
Major End Markets Major Applications Material Product Families Broadband • STB and Broadband Access • STB SoCs • DSL/PON gateways • DOCSIS cable modem and networking infrastructure • DSLAM/PON optical line termination • Wi-Fi access point SoCs Networking • Data Center, Service Provider, and Enterprise Networking • Ethernet switching and routing silicon • Custom silicon solutions • Optical and copper PHYs • Fiber optic transmitter and receiver components Wireless • Mobile Device Connectivity • RF front end modules and filters • Wi-Fi, Bluetooth, GPS/GNSS SoCs • Custom touch controllers • Inductive charging ASICs Storage • Servers and Storage Systems • SAS and RAID controllers and adapters • PCIe switches • Fibre channel host bus adapters • Ethernet NIC • HDD and SSD • Read channel based SoCs; Custom flash controllers • Preamplifiers Industrial • Factory Automation, Renewable Energy and Automotive Electronics • Optocouplers • Industrial fiber optics • Industrial and medical sensors • Motion control encoders and subsystems • Light emitting diode • Ethernet PHYs, switch ICs and camera microcontrollers Set-Top Box Solutions: We offer complete SoC platform solutions for cable, satellite, Internet Protocol television, over-the-top and terrestrial STBs.
Automation : These solutions reduce manual effort by enabling customers to proactively optimize resources and orchestrate automation across enterprise applications and systems. Databases & Database Management : These high-performance databases and management tools store, organize, and manage mainframe data to ensure optimal performance, efficient administration, and reliability of critical systems.
Workload Automation: These solutions reduce manual effort by enabling customers to proactively optimize resources and orchestrate automation across enterprise applications and systems. Databases & Data Management : These high-performance databases and management tools store, organize, and manage mainframe data to ensure optimal performance, efficient administration, and reliability of critical systems.
We believe aggregate sales to Apple Inc., through all channels, accounted for approximately 20% of our net revenue for each of fiscal years 2022 and 2021. We expect to continue to experience significant customer concentration in future periods.
We believe aggregate sales to Apple Inc., through all channels, accounted for approximately 20% of our net revenue for each of fiscal years 2023 and 2022. We expect to continue to experience significant customer concentration in future periods.
Industrial End Markets: We also provide a broad variety of products for the general industrial and automotive markets, including optocouplers, industrial fiber optics, motion encoders, light emitting diode devices, and Ethernet ICs.
Industrial End Markets: We also provide a broad variety of products for the general industrial and automotive markets, including optocouplers, industrial fiber optics, industrial and medical sensors, motion encoders, light emitting diode devices, and Ethernet ICs.
Our Symantec solutions utilize rich threat intelligence from a global network of security engineers, threat analyst and researchers, as well as advanced artificial intelligence (“AI”) and machine-learning engines, enabling customers to protect data, connect authorized users with trusted applications, and detect and respond to the most advanced targeted attacks.
Our Symantec solutions utilize rich threat intelligence from a global network of security engineers, 6 Table of Contents threat analyst and researchers, as well as advanced artificial intelligence (“AI”) and machine-learning engines, enabling customers to protect data, connect authorized users with trusted applications, and detect and respond to the most advanced targeted attacks.
By doing so, we can protect our IP and accelerate time to market for our products. The majority of our internal III-V semiconductor wafer fabrication is done in the U.S. and Singapore. We also have a long history of operating in Asia where we manufacture and source the majority of our products and materials.
By doing so, we can protect our IP and accelerate time to market for our products. The majority of our internal III-V semiconductor wafer fabrication is done in the U.S. and Singapore. 9 Table of Contents We also have a long history of operating in Asia where we manufacture and source the majority of our products and materials.
He was also the leader of Product Line Management for the Optical Ethernet and Multi-service Edge portfolio at Nortel Networks Corporation prior to joining LSI. 12 Table of Contents
He was also the leader of Product Line Management for the Optical Ethernet and Multi-service Edge portfolio at Nortel Networks Corporation prior to joining LSI. 13 Table of Contents
In addition, our business is subject to various import/export regulations, such as the U.S. Export Administration Regulations, and applicable executive orders, and rules of industrial standards bodies, like the International Organization for Standardization, as well as regulation by other agencies, such as the U.S. Federal Trade Commission (“FTC”).
In addition, our business is subject 11 Table of Contents to various import/export regulations, such as the U.S. Export Administration Regulations, and applicable executive orders, and rules of industrial standards bodies, like the International Organization for Standardization, as well as regulation by other agencies, such as the U.S. Federal Trade Commission (“FTC”).
These products are part of a broader location platform that leverages a broad range of communications technologies, including Wi-Fi, Bluetooth and GPS, to provide more accurate location and navigation capabilities. Custom Touch Controllers: Our touch controllers process signals from touch screens in mobile handsets and tablets.
These products are part of a broader location platform that leverages a broad range of communications technologies, including Wi-Fi, Bluetooth and GPS, to provide more accurate location and navigation capabilities. 5 Table of Contents Custom Touch Controllers: Our touch controllers process signals from touch screens in mobile handsets and tablets.
Additionally, our ability to compete effectively depends on a number of factors, including: quality, technical performance, price, product features, product system 9 Table of Contents compatibility, system-level design capability, engineering expertise, responsiveness to customers, new product innovation, product availability, delivery timing and reliability, and customer sales and technical support.
Additionally, our ability to compete effectively depends on a number of factors, including: quality, technical performance, price, product features, product system compatibility, system-level design capability, engineering expertise, responsiveness to customers, new product innovation, product availability, delivery timing and reliability, and customer sales and technical support.
He served as our Chief Operating Officer from December 2020 to July 2022, Senior Vice President and Chief Sales Officer from June 2015 to December 2020 and Senior Vice President, Worldwide Sales from May 2014 to June 2015. He was head of worldwide sales at LSI Corporation from 2010 until its acquisition by us in 2014.
He served as our Chief Operating Officer from December 2020 to July 2022, Senior Vice President and Chief Sales Officer from June 2015 to December 2020 and Senior Vice President, Worldwide Sales from May 2014 to June 2015. He was head of worldwide sales at 12 Table of Contents LSI Corporation from 2010 until its acquisition by us in 2014.
We deliver reliable and simplified management of these FC SAN products through our software-based management tools designed to maximize uptime, dramatically simplify storage area networking deployment and management, and provide high levels of visibility and insight into the storage network. 6 Table of Contents The table below presents our software portfolios and their material offerings during fiscal year 2022.
We deliver reliable and simplified management of these FC SAN products through our software-based management tools designed to maximize uptime, dramatically simplify storage area networking deployment and management, and provide high levels of visibility and insight into the storage network. The table below presents our software portfolios and their material offerings during fiscal year 2023.
We seek to achieve this through responsibly financed acquisitions of category-leading businesses and technologies, as well as investing extensively in research and development, to ensure our products retain their technology leadership. This strategy results in a robust business model designed to drive diversified and sustainable operating and financial results.
We seek to achieve this through responsibly financed acquisitions of category-leading businesses and technologies, as well as investing extensively in research and development, to ensure our products retain their technology leadership. This strategy results in a robust business model designed to drive diversified and sustainable operating and financial results. Recent Development Acquisition of VMware, Inc.
We have established 8 Table of Contents strong relationships with leading OEM customers across multiple target markets. Our direct sales force focuses on supporting our large OEM customers, and has specialized product and service knowledge that enables us to sell specific offerings at key levels throughout a customer’s organization.
We have established strong relationships with leading OEM customers across multiple target markets. Our direct sales force focuses on supporting our large OEM customers, and has specialized product and service knowledge that enables us to sell specific offerings at key levels throughout a customer’s organization.
We offer a broad set of Ethernet switching and routing products that are optimized for data center, service provider network, enterprise network, and embedded network applications. In the data center market, our high capacity, low latency, switching silicon supports advanced protocols around virtualization and multi-pathing.
We offer a broad set of Ethernet switching and routing products that are optimized for data center, service provider and enterprise networks. In the data center market, our high capacity, low latency, switching silicon supports advanced protocols around virtualization and multi-pathing.
Our primary competitors are Atlassian Corporation, Plc, BMC Software Inc., BeyondTrust Corporation, Cisco Systems, Inc., CrowdStrike Holdings, Inc., CyberArk Software, Ltd., International Business Machines Corporation, Micro Focus International plc, Microsoft Corporation, New Relic, Inc., Oracle Corporation, Proofpoint, Inc., Rocket Software, Inc., SailPoint Technologies Holdings, Inc., Salesforce.com, Inc., ServiceNow, Inc., SolarWinds Corporation, Splunk, Inc. and Zscaler, Inc.
Our primary competitors are Atlassian Corporation, Plc, BeyondTrust Corporation, BMC Software Inc., Cisco Systems, Inc., CrowdStrike Holdings, Inc., CyberArk Software, Ltd., Dino-Software Corporation, International Business Machines Corporation, Microsoft Corporation, New Relic, Inc., OpenText Corporation, Oracle Corporation, Proofpoint, Inc., Rocket Software, Inc., SailPoint Technologies Holdings, Inc., Salesforce.com, Inc., ServiceNow, Inc., SolarWinds Corporation, Splunk, Inc. and Zscaler, Inc.
We focus on markets that require high quality and the 3 Table of Contents technology leadership and integrated performance characteristic of our products. The table below presents our material semiconductor product families and their major end markets and applications during fiscal year 2022.
We focus on markets that require high quality and the technology leadership and integrated performance characteristic of our products. The table below presents our material semiconductor product families and their major end markets and applications during fiscal year 2023.
Our open-first strategy helps customers modernize their mainframe environment through the use of open source and open application programming technologies across people, process, tooling and applications, resulting in greater synergy and alignment with their corporate information technology (“IT”).
Our open-first strategy helps customers modernize their mainframe environment through the use of open source and open application programming technologies across people, process, tooling and applications, resulting in greater synergy and alignment with their corporate IT.
Sales to distributors accounted for 56% and 53% of our net revenue for fiscal years 2022 and 2021, respectively. We believe aggregate sales to our top five end customers, through all channels, accounted for approximately 35% of our net revenue for each of our fiscal years 2022 and 2021.
Sales to distributors accounted for 57% and 56% of our net revenue for fiscal years 2023 and 2022, respectively. We believe aggregate sales to our top five end customers, through all channels, accounted for approximately 35% of our net revenue for each of our fiscal years 2023 and 2022.
We offer integrated information security solutions, based on an efficient, single-policy that can be applied across the entire environment, to help organizations identify and protect risky users, applications and their most sensitive data everywhere across endpoints, on-premises networks, cloud services and private applications.
Information Security: Information protection and compliance is critical to managing risk. We offer integrated information security solutions, based on an efficient, single-policy that can be applied across the entire environment, to help organizations identify and protect risky users, applications and their most sensitive data everywhere across endpoints, on-premises networks, cloud services and private applications.
Our global voluntary attrition rate in fiscal year 2022 was approximately 6.5%, below the technology industry benchmark (AON, 2022 Salary Increase and Turnover Study — Second Edition, September 2022). We also track the portion of our workforce in research and development roles.
Our global voluntary attrition rate in fiscal year 2023 was approximately 3.3%, well below the technology industry benchmark (AON, 2023 Salary Increase and Turnover Study — Second Edition, September 2023). We also track the portion of our workforce in research and development roles.
The expiration dates of our patents range from 2022 to 2041, with a small number of patents expiring in the near future, none of which are expected to be material to our IP portfolio. We are not substantially dependent on any single patent or group of related patents.
The expiration dates of our patents range from 2023 to 2042, with a small number of patents expiring in the near future, none of 10 Table of Contents which are expected to be material to our IP portfolio. We are not substantially dependent on any single patent or group of related patents.
We compete based on the strength and expertise of our high speed proprietary design expertise, FBAR technology, amplifier design, module integration, proprietary materials processes, multiple storage protocols and mixed-signal design, our broad product portfolio, support of key industry standards, reputation for quality products, and our customer relationships.
(f/k/a Cree, Inc.), and II-VI Incorporated. We compete based on the strength and expertise of our high speed proprietary design expertise, FBAR technology, amplifier design, module integration, proprietary materials processes, multiple storage protocols and mixed-signal design, our broad product portfolio, support of key industry standards, reputation for quality products, and our customer relationships.
Software Portfolio Portfolio Description Major Portfolio Offerings Mainframe Software • Solutions for DevOps, AIOps, Security and Database Management Systems • Operational Analytics & Management • Automation • Database & Database Management • Application Development & Testing • Identity & Access Management • Compliance & Data Protection • Security Insights Distributed Software • Solutions that optimize the planning, development and delivery of business critical services • ValueOps • DevOps • AIOps Symantec Cyber Security • Comprehensive threat protection and compliance solutions that secure against threats and compliance risks by protecting users and data on any app, device, or network • Endpoint Security • Network Security • Information Security • Identity Security FC SAN Management • Solutions that transforms current storage networks with autonomous SAN capabilities • Fibre Channel Switch Payment Security • Arcot payment authentication network powered by 3-D Secure • Payment Security Suite Operational Analytics & Management : These solutions combine big data, machine learning and AI with mainframe expertise to deliver meaningful and actionable insights to augment and automate day-to-day operations and deliver exceptional customer experiences.
Software Portfolio Portfolio Description Major Portfolio Offerings Mainframe Software • DevOps, AIOps, Security, Workload Automation, Data Management, and Foundational Software Solutions • Operational Analytics & Management • Workload Automation • Database & Data Management • Application Development & Testing • Identity & Access Management • Compliance & Data Protection • Security Insights • Beyond Code programs • Skills Development and Staffing • Software Rationalization and Migration • Software Efficiency and Cost Optimization Tools • Change Management Support • Technology Proof of Concepts Distributed Software • Solutions that optimize the planning, development and delivery of business critical services • ValueOps • DevOps • AIOps Symantec Cyber Security • Comprehensive threat protection and compliance solutions that secure against threats and compliance risks by protecting users and data on any app, device, or network • Endpoint Security • Network Security • Information Security • Identity Security FC SAN Management • Solutions that transforms current storage networks with autonomous SAN capabilities • Fibre Channel Switch Payment Security • Arcot payment authentication network powered by 3-D Secure • Payment Security Suite Operational Analytics & Management : These solutions combine big data, machine learning and AI with mainframe expertise to deliver meaningful and actionable insights to augment and automate day-to-day operations and deliver exceptional customer experiences.
Our Ethernet switching fabric technologies provide the ability to build highly scalable flat networks supporting tens of thousands of servers. Our service provider switch portfolio enables carrier/service provider networks to support a large number of services in the wireless backhaul, access, aggregation and core of their networks.
Our Ethernet switching fabric technologies provide the ability to build highly scalable flat networks supporting tens of thousands of servers. Our service provider switch portfolio enables carrier networks to support prioritized delivery of data traffic in the wireless backhaul, access, aggregation and core of their networks.
We believe our current product expertise, key engineering talent and IP portfolio provide us with a strong platform from which to develop application specific products in key target markets. As of October 30, 2022, we had 17,035 U.S. and other patents and 618 U.S. and other pending patent applications.
We believe our current product expertise, key engineering talent and IP portfolio provide us with a strong platform from which to develop application specific products in key target markets. As of October 29, 2023, we had 15,400 U.S. and other patents and 910 U.S. and other pending patent applications.
As of October 30, 2022, we had approximately 20,000 employees worldwide, with approximately 63% in research and development roles. By geography, approximately 54% of our employees are located in North America, 35% in Asia, and 11% in Europe, the Middle East and Africa.
As of October 29, 2023, we had approximately 20,000 employees worldwide, with approximately 63% in research and development roles. By geography, approximately 54% of our employees are located in North America, 34% in Asia, and 12% in Europe, the Middle East and Africa.
He held several senior legal positions at Broadcom Corporation from 2000 to 2014, including Senior Vice President and Senior Deputy General Counsel in charge of all commercial, operational, IP licensing and litigation matters.
He was Chief Legal Officer and Senior Vice President, IP Licensing for SanDisk Corporation from 2014 until its acquisition by Western Digital Corporation in 2016. He held several senior legal positions at Broadcom Corporation from 2000 to 2014, including Senior Vice President and Senior Deputy General Counsel in charge of all commercial, operational, IP licensing and litigation matters.
Ltd., iC-Haus GmbH, Intel Corporation, Lumentum Holdings Inc., MACOM Technology Solutions Holdings, Inc., MaxLinear, Inc., Marvell Technology, Inc., MediaTek Inc., NVIDIA Corporation, Microchip Technology Incorporated, Mitsubishi Electric Corporation, Murata Manufacturing Co., Ltd., NXP Semiconductors N.V., ON Semiconductor Corporation, OSRAM Licht AG, Qorvo, Inc., Qualcomm Inc., Realtek Semiconductor Corp., Renesas Electronics Corporation, Skyworks Solutions, Inc., STMicroelectronics N.V., Sumitomo Corporation, Synaptics Incorporated, TDK-EPC Corporation, Toshiba Corporation, Texas Instruments, Inc. and II-VI Incorporated.
Our primary competitors are Advanced Micro Devices, Inc., Amlogic Inc., Analog Devices, Inc., Cisco Systems, Inc., GlobalFoundries Inc., Hamamatsu Photonics K.K., Heidenhain Corporation, iC-Haus GmbH, Intel Corporation, Lumentum Holdings Inc., MACOM Technology Solutions Holdings, Inc., Marvell Technology, Inc., MaxLinear, Inc., MediaTek Inc., Microchip Technology Incorporated, Mitsubishi Electric Corporation, Murata Manufacturing Co., Ltd., NVIDIA Corporation, NXP Semiconductors N.V., ON Semiconductor Corporation, OSRAM Licht AG, Qorvo, Inc., Qualcomm Inc., Realtek Semiconductor Corp., Renesas Electronics Corporation, Skyworks Solutions, Inc., STMicroelectronics N.V., Sumitomo Corporation, Synaptics Incorporated, Texas Instruments, Inc., TDK-EPC Corporation, Toshiba Corporation, Wolfspeed, Inc.
Flash controllers manage the underlying flash memory in SSDs, performing critical functions such as reading and writing data to and from the flash memory and performing error correction, wear leveling and bad block management.
An SSD stores data in flash memory instead of on a hard disk, providing high speed access to the data. Flash controllers manage the underlying flash memory in SSDs, performing critical functions such as reading and writing data to and from the flash memory and performing error correction, wear leveling and bad block management.
Fibre Channel Products: We provide fibre channel host bus adapters, which connect host computers such as servers to FC SANs. Ethernet Network Interface Card (“NIC”) Controllers: Our Ethernet NIC controllers are designed for high-performance virtualization, intelligent flow processing, secure data center connectivity, and machine learning. HDD & SSD Products: We provide read channel-based SoCs and preamplifiers to HDD OEMs.
Ethernet NIC Controllers: Our Ethernet network interface card (“NIC”) controllers are designed for high-performance virtualization, intelligent flow processing, secure data center connectivity, and machine learning. HDD & SSD Products: We provide read channel-based SoCs and preamplifiers to HDD OEMs. These are the critical chips required to read, write and protect data.
Our Symantec endpoint security solutions prevent, detect and respond to emerging threats across all devices and operating systems including laptops, desktops, tablets, mobile phones, servers and cloud workloads through an intelligent AI driven security console and single agent. Network Security: Email and web access are the lifeblood and essential communication means for every modern organization.
Endpoint Security: Endpoints are the critical last line of defense against cyber attackers. Our Symantec endpoint security solutions prevent, detect and respond to emerging threats across all devices and operating systems including laptops, desktops, tablets, mobile phones, servers and cloud workloads through an intelligent AI driven security console and single agent.
Read channels convert analog signals that are generated by reading the stored data on the physical media into digital signals. In addition, we sell preamplifiers, which are complex, high speed, mixed signal devices that enable writing and reading data to and from the HDD heads. The preamplifier interfaces with the SoC to provide the electronics data path in a HDD.
In addition, we sell preamplifiers, which are complex, high speed, mixed signal devices that enable writing and reading data to and from the HDD heads. The preamplifier interfaces with the SoC to provide the electronics data path in a HDD. We also provide custom flash controllers to SSD OEMs.
These are the critical chips required to read, write and protect data. An HDD SoC is an integrated circuit (“IC”) that combines the functionality of a read channel, serial interface, memory and a hard disk controller in a small, high-performance, low-power and cost-effective package.
An HDD SoC is an integrated circuit (“IC”) that combines the functionality of a read channel, serial interface, memory and a hard disk controller in a small, high-performance, low-power and cost-effective package. Read channels convert analog signals that are generated by reading the stored data on the physical media into digital signals.
We have a full array of network security solutions, as well as a shared set of advanced threat protection technologies to stop inbound and outbound threats targeting end users, information and key infrastructure. Information Security: Information protection and compliance is critical to managing risk.
Network Security: Email and web access are the lifeblood and essential communication means for every modern organization. We have a full array of network security solutions, as well as a shared set of advanced threat protection technologies to stop inbound and outbound threats targeting end users, information and key infrastructure.
She was Vice President and Corporate Controller at LSI Corporation from 2007 until its acquisition by us in 2014. She held several management positions in accounting and reporting at LSI from 1997 to 2007. She also worked for PriceWaterhouseCoopers prior to joining LSI. Mark D. Brazeal has served as our Chief Legal and Corporate Affairs Officer since December 2021.
She served as our Principal Accounting Officer from March 2016 to December 2020 and Vice President and Corporate Controller from May 2014 to December 2020. She was Vice President and Corporate Controller at LSI Corporation from 2007 until its acquisition by us in 2014. She held several management positions in accounting and reporting at LSI from 1997 to 2007.
Products and Markets Semiconductor Solutions Semiconductors are made by imprinting a network of electronic components onto a semiconductor wafer. These devices are designed to perform various functions such as processing, amplifying and selectively filtering electronic signals, controlling electronic system functions and processing, and transmitting and storing data.
These devices are designed to perform various functions such as processing, amplifying and selectively filtering electronic signals, controlling electronic system functions and processing, and transmitting and storing data.
We focus our research and development efforts on the development of mission critical, innovative, sustainable and higher value product platforms and those that improve the quality and stability in our broadly deployed products. We leverage our design capabilities in markets where we believe our innovation and reputation will allow us to earn attractive margins by developing high value-add products.
We focus our research and development efforts on the development of mission critical, innovative, sustainable and higher value product platforms and those that improve the quality and stability in our broadly deployed products.
Infrastructure Software Our infrastructure software solutions enables customers greater choice and flexibility to build, run, manage, connect and protect applications at scale across diversified and distributed environments. Our mainframe software provides market-leading DevOps, AIOps, Security and Data Management Systems solutions.
Infrastructure Software Our infrastructure software solutions offer customers greater choice and flexibility to build, run, manage, connect and protect applications and data at scale across hybrid IT environments.
Key stakeholders have a single view of key insights into release progress, health, quality, and defect trends, and metrics that drive focus, gauge readiness, and help to ensure successful, quality releases.
Key stakeholders have a single view of key insights into release progress, health, quality, defect trends, and metrics that drive focus, gauge readiness, and help to ensure successful, quality releases. AIOps: This solution combines application, infrastructure and network monitoring and correlation with intelligent remediation capabilities to help customers create more resilient production environments and improve customer experience.
Under certain contingent circumstances, some of our customers are beneficiaries of a source code escrow 10 Table of Contents arrangement that would enables them to obtain a limited right to access and use our source code if specific conditions are met. Employees Our success depends on our continued ability to attract, motivate and retain our workforce.
Rather, on-premise customers typically access only the executable code for our products, and SaaS customers access only the functionality of our SaaS offerings. Under certain contingent circumstances, some of our customers are beneficiaries of a source code escrow arrangement that would enable them to obtain a limited right to access and use our source code if specific conditions are met.
Such periodic reports, proxy statements and other information are also available at the SEC’s website at www.sec.gov .
Such periodic reports, proxy statements and other information are also available at the SEC’s website at www.sec.gov . The reference to our website address does not constitute incorporation by reference of the information contained on or accessible through our website.
Our field application engineers, design engineers, and product and software development engineers are located in many places around the world, and in many cases near our top customers.
We also invest in process development and improvements to product features and functions, as well as fabrication capabilities to optimize processes for devices that are manufactured internally. Our field application engineers, design engineers, and product and software development engineers are located in many places around the world, and in many cases near our top customers.
Other solutions are delivered as circuit boards, known as adapter products, which incorporate our semiconductors onto a circuit board with other features.
Other solutions are delivered as circuit boards, known as adapter products, which incorporate our semiconductors onto a circuit board with other features. RAID technology is a critical part of our server storage connectivity solutions as it provides protection against the loss of critical data resulting from HDD failures.
He was Vice President of Finance at Commodore International, Ltd. from 1992 to 1994, and held senior management positions at PepsiCo, Inc. and General Motors Corporation. He was also managing director of Pacven Investment, Ltd., a venture capital fund in Singapore, from 1988 to 1992, and was managing director of Hume Industries Ltd. in Malaysia from 1983 to 1988.
He also held several executive leadership positions at ICS, including Chief Operating Officer from 1996 to 1999 and Senior Vice President and Chief Financial Officer from 1995 to 1999. He was Vice President of Finance at Commodore International, Ltd. from 1992 to 1994, and held senior management positions at PepsiCo, Inc. and General Motors Corporation.
As the source of our technological and product innovations, our engineering and technical personnel are a significant asset. Competition for these and other talented employees is significant in many locations where we operate, such as Silicon Valley and Southeast Asia. We measure our employees’ engagement by our voluntary attrition rate and employee feedback.
Employees Our continued success depends on our ability to attract, motivate and retain our workforce in a highly competitive labor market. Specifically, as the source of our technological and product innovations, our engineering and technical personnel are a critical asset. We measure our employees’ engagement by our voluntary attrition rate and employee feedback.
Compliance & Data Protection : These solutions locate and protect sensitive mainframe data to ensure compliance and identify risk, identify and proactively respond to potential risks and bad actors, and reduce risk and lighten security management load with automated identification and authorization cleanup.
Identity & Access Management : These solutions manage mainframe access and elevate it with modern practices such as multi-factor authentication and privileged user management, and support all external security managers. 7 Table of Contents Compliance & Data Protection : These solutions protect crucial mainframe data to ensure compliance, identify risk, proactively respond to potential threats, and reduce those risks to lighten the load on security management with automated identification and authorization cleanup.
In the semiconductor market, we compete with integrated device manufacturers, fabless semiconductor companies, as well as the internal resources of large, integrated OEMs. Our primary competitors are Amlogic Inc., Analog Devices, Inc., Advanced Micro Devices, Inc., Cisco Systems, Inc., Wolfspeed, Inc. (f/k/a Cree, Inc.), GlobalFoundries Inc., Hamamatsu Photonics K.K., Heidenhain Corporation, HiSilicon Technologies Co.
In the semiconductor market, we compete with integrated device manufacturers, fabless semiconductor companies, as well as the internal resources of large, integrated OEMs.
Tan 71 President, Chief Executive Officer and Director Kirsten M. Spears 58 Chief Financial Officer and Chief Accounting Officer Mark D. Brazeal 54 Chief Legal and Corporate Affairs Officer Charlie B. Kawwas, Ph.D. 52 President, Semiconductor Solutions Group Hock E. Tan has served as our President and Chief Executive Officer since March 2006.
Information About Our Executive Officers The following table provides information regarding our executive officers as of December 14, 2023: Name and Title Age Position and Offices Hock E. Tan 72 President, Chief Executive Officer and Director Kirsten M. Spears 59 Chief Financial Officer and Chief Accounting Officer Mark D. Brazeal 55 Chief Legal and Corporate Affairs Officer Charlie B.
RAID technology is a critical part of our server storage connectivity solutions as it provides protection against the loss of critical data resulting from HDD failures. 5 Table of Contents We also provide interconnect semiconductors that support the peripheral component interconnect express (“PCIe”) communication standards. PCIe is the primary interconnection mechanism inside computing systems today.
We also provide interconnect semiconductors that support the peripheral component interconnect express (“PCIe”) communication standards. PCIe is the primary interconnection mechanism inside computing systems today. Fibre Channel Products: We provide fibre channel host bus adapters, which connect host computers such as servers to FC SANs.
Kirsten M. Spears has served as our Chief Financial Officer and Chief Accounting Officer since December 2020. She served as our Principal Accounting Officer from March 2016 to December 2020 and Vice President and Corporate Controller from May 2014 to December 2020.
He was also managing director of Pacven Investment, Ltd., a venture capital fund in Singapore, from 1988 to 1992, and was managing director of Hume Industries Ltd. in Malaysia from 1983 to 1988. Kirsten M. Spears has served as our Chief Financial Officer and Chief Accounting Officer since December 2020.
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For enterprise networks and embedded Ethernet applications, we offer product families that combine multi-layer switching capabilities and support lower power modes that comply with industry standards around energy efficient Ethernet. 4 Table of Contents Embedded Processors & Controllers: Our embedded processors leverage our ARM central processing unit and Ethernet switching technology to deliver SoCs for high performance embedded applications in a wide range of communication products such as voice-over-internet-protocol, telephony, point-of-sale devices and enterprise and retail access points and gateways.
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In addition, the hybrid-cloud portfolio we acquired with VMware helps enterprises simplify their information technology (“IT”) environments so they can increase business velocity and flexibility. The VMware portfolio spans hybrid cloud, app-delivery acceleration, zero-trust security, and software-defined edge, making it easy for customers to run their mission-critical workloads across private, public and edge environments with security and resiliency.
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We offer a range of knowledge-based processors to enable high-performance decision-making for packet processing in a variety of advanced devices in the enterprise, metro, access, edge and core networking spaces. We also offer a range of Ethernet controllers for servers and storage systems supporting multiple generations of Ethernet technology.
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On November 22, 2023, we acquired VMware in a cash-and-stock transaction (the “VMware Merger”), in which VMware stockholders received, in aggregate, approximately $30.8 billion in cash and 54.4 million shares of Broadcom common stock in exchange for all shares of VMware common stock issued and outstanding immediately prior to the closing.
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We also provide custom flash controllers to SSD OEMs. An SSD stores data in flash memory instead of on a hard disk, providing high speed access to the data.
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The preliminary total purchase consideration for the VMware Merger was approximately $86.3 billion. We funded the cash portion of the VMware Merger consideration with net proceeds from the issuance of $30.4 billion in term loans under a credit agreement that we entered into on August 15, 2023, as well as cash on hand.
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We help enterprises embrace open tools and technologies, integrate their mainframe into their cloud infrastructures, and amplify the value of their mainframe investments.
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We assumed all outstanding VMware restricted stock unit (“RSU”) awards and performance stock unit awards held by continuing employees. The assumed awards were converted into approximately 5 million Broadcom RSU awards.
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By partnering with our customers and providing creative value-added programs, we help customers overcome challenges related to skills development, technical education, strategy and planning, and the need for cloud-like pricing flexibility to support their overall business success with the platform.
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All outstanding in-the-money VMware stock options and RSU awards held by non-employee directors were accelerated and converted into the right to receive cash and shares of Broadcom common stock, in equal parts.
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Identity & Access Management : These solutions manage mainframe access and elevate it with modern practices such as multi-factor authentication, managing access for privileged users, and supporting all external security managers.
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All discussions and information in this Annual Report on Form 10-K regarding our business and financial results relate solely to our operations prior to the VMware Merger, unless otherwise indicated. 3 Table of Contents Products and Markets Semiconductor Solutions Semiconductors are made by imprinting a network of electronic components onto a semiconductor wafer.
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AIOps: This solution combines application, infrastructure and network monitoring and correlation with intelligent remediation capabilities to help customers create more resilient production environments and improve customer experience. 7 Table of Contents Endpoint Security: Endpoints are the critical last line of defense against cyber attackers.
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For enterprise networks, we offer product families with secure, encrypted switching capabilities and support lower power modes that comply with industry standards around energy efficient Ethernet.
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We plan to continue investing in product development, both organically and through acquisitions, to drive growth in our business. We also invest in process development and improvements to product features and functions, as well as fabrication capabilities to optimize processes for devices that are manufactured internally.
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Our mainframe software provides market-leading DevOps, AIOps, Security, Workload Automation, Data Management, and Foundational Software solutions, that enable customers to embrace open tools and technologies, innovate with their mainframe as part of their hybrid cloud, and amplify the value of their mainframe investments.
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Rather, on-premise customers typically access only the executable code for our products, and SaaS customers access only the functionality of our SaaS offerings.
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Our commitment to partnering with our customers extends beyond products and technology and includes unique Beyond Code programs that address challenges such as skills development, staffing, change management, and cost-saving initiatives that drive overall business success with the platform.
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The reference to our website address does not constitute incorporation by reference of the information contained on or accessible through our website. 11 Table of Contents Information About Our Executive Officers The following table provides information regarding our executive officers as of December 16, 2022: Name and Title Age Position and Offices Hock E.
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Customers can also manage their mainframe data storage using modern mainframe solutions that securely store data on any device that customers choose, including the cloud. These software-only solutions are designed to save on costs and maintain confidence in data security.
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He served as our Chief Legal Officer from March 2017 to December 2021. He was Chief Legal Officer and Senior Vice President, IP Licensing for SanDisk Corporation from 2014 until its acquisition by Western Digital Corporation in 2016.
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Beyond Code Programs : These value-added offerings go above and beyond the leading software we provide to help ensure our customers get the most out of their mainframe investments. These offerings unlock additional value for organizations in areas like educating and upskilling the workforce, providing expert guidance and support for change events, uncovering opportunities to improve efficiency and save costs.
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We leverage our design capabilities in markets where we believe our innovation and reputation will allow us to earn attractive margins by developing high value-add products. 8 Table of Contents We plan to continue investing in product development, both organically and through acquisitions, to drive growth in our business.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest change(“VMware Merger”) may adversely affect our business and our stock price. • We may pursue acquisitions, investments, joint ventures and dispositions, which could adversely affect our results of operations. • We may be involved in legal proceedings, including IP, securities litigation, and employee-related claims. • Our operating results are subject to substantial quarterly and annual fluctuations. • Failure to adjust our manufacturing and supply chain to accurately meet customer demand could adversely affect our results of operations. • Winning business in the semiconductor solutions industry is subject to a lengthy process that often requires us to incur significant expense, from which we may ultimately generate no revenue. • Competition in our industries could prevent us from growing our revenue. • A prolonged disruption of our manufacturing facilities, research and development facilities, warehouses or other significant operations, or those of our suppliers, could have a material adverse effect on us. • We may be unable to maintain appropriate manufacturing capacity or product yields at our own manufacturing facilities. • An impairment of the confidentiality, integrity, or availability of our IT systems, or those of one or more of our corporate infrastructure vendors, could have a material adverse effect on our business. • Our ability to maintain or improve gross margin. • Our ability to protect the significant amount of IP in our business. • Incompatibility of our software products with operating environments, platforms, or third-party products, demand for our products and services could decrease. • Failure to enter into software license agreements on a satisfactory basis could adversely affect us. 13 Table of Contents • Licensed third party software used in our products may not be available to us in the future, which may delay product development and production or cause us to incur additional expense. • Use of open source code sources, which, under certain circumstances could materially adversely affect us. • Failure of our software products to manage and secure IT infrastructures and environments could have a material adverse effect on our business. • We are subject to warranty claims, product recalls and product liability. • The complexity of our products could result in unforeseen delays or expense or undetected defects or bugs. • We make substantial investments in research and development and unsuccessful investments could materially adversely affect our business, financial condition and results of operations. • We collect, use, store, or otherwise process personal information, which subjects us to privacy and data security laws and contractual commitments, and our actual or perceived failure to comply with such laws and commitments could harm our business. • We are subject to environmental, health and safety laws, which could increase our costs, restrict our operations and require expenditures. • Social and environmental regulations, policies and provisions, as well as customer and investor demands, may make our supply chain more complex and may adversely affect our relationships with customers and investors. • The average selling prices of semiconductor products in our markets have often decreased rapidly and may do so in the future. • Fluctuations in foreign exchange rates could result in losses.
Biggest changeCompliance with these regulations may cause us to incur significant expense and, if we fail to maintain compliance, we may be forced to cease manufacture and distribution of certain products or subjected to administrative proceedings and civil or criminal penalties. • Global political and economic conditions and other factors related to our international operations could adversely affect us. • The failure to realize the expected benefits from the VMware Merger may adversely affect our business and the value of our common stock. • We may pursue acquisitions, investments, joint ventures and dispositions, which could adversely affect our results of operations. • We are subject to risks associated with our distributors and other channel partners, including product inventory levels and product sell-through. • We are dependent on senior management and if we are unable to attract and retain qualified personnel, we may not be able to execute our business strategy effectively. • An impairment of the confidentiality, integrity, or availability of our IT systems, or those of one or more of our corporate infrastructure vendors, could have a material adverse effect on our business. • We operate in the highly cyclical semiconductor industry. • The majority of our sales come from a small number of customers and a reduction in demand or loss of one or more of our significant customers may adversely affect our business. • Dependence on contract manufacturing and suppliers of critical components within our supply chain may adversely affect our ability to bring products to market. • We purchase a significant amount of the materials used in our products from a limited number of suppliers. • Failure to adjust our manufacturing and supply chain to accurately meet customer demand could adversely affect our results of operations. • Winning business in the semiconductor solutions industry is subject to a lengthy process that often requires us to incur significant expense, from which we may ultimately generate no revenue. • A prolonged disruption of our manufacturing facilities, research and development facilities, warehouses or other significant operations, or those of our suppliers, could have a material adverse effect on us. • We may be unable to maintain appropriate manufacturing capacity or product yields at our own manufacturing facilities. • We may be involved in legal proceedings, including IP, securities litigation, and employee-related claims that could adversely affect our business. • If demand for our data center virtualization products is less than anticipated, our business could be adversely affected. • The growth of our software business depends on customer acceptance of our newer products and services. • Incompatibility of our software products with operating environments, platforms, or third-party products, demand for our products and services could decrease. • Failure to enter into software license agreements on a satisfactory basis could adversely affect us. • Licensed third party software used in our products may not be available to us in the future, which may delay product development and production or cause us to incur additional expense. 14 Table of Contents • Our use of open source software in certain products and services could materially adversely affect our business, financial condition and results of operations. • Failure of our software products to manage and secure IT infrastructures and environments could have a material adverse effect on our business. • Our sales to government customers subject us to uncertainties and governmental regulations, which could have a material adverse effect on our business. • Failure to effectively manage our products and services lifecycles could harm our business. • Our operating results are subject to substantial quarterly and annual fluctuations. • Competition in our industries could prevent us from growing our revenue. • Our ability to maintain or improve gross margin. • Our ability to protect the significant amount of IP in our business. • We are subject to warranty claims, product recalls and product liability. • The complexity of our products could result in unforeseen delays or expense or undetected defects or bugs. • We make substantial investments in research and development and unsuccessful investments could materially adversely affect our business, financial condition and results of operations. • We collect, use, store, or otherwise process personal information, which subjects us to privacy and data security laws and contractual commitments, and our actual or perceived failure to comply with such laws and commitments could harm our business. • We are subject to environmental, health and safety laws, which could increase our costs, restrict our operations and require expenditures. • Environmental, social and governance matters may adversely affect our relationships with customers and investors. • The average selling prices of semiconductor products in our markets have often decreased rapidly and may do so in the future. • Fluctuations in foreign exchange rates could result in losses.
In addition, a significant majority of our research and development personnel are located the Czech Republic, India, Israel and the U.S., with the expertise of the personnel at each such location tending to be focused on one or two specific areas, and our primary warehouse is in Malaysia.
In addition, a significant majority of our research and development personnel are located in the Czech Republic, India, Israel, and the U.S., with the expertise of the personnel at each such location tending to be focused on one or two specific areas, and our primary warehouse is in Malaysia.
Further, any substantial disruption in the contract manufacturing services that we utilize, including TSMC’s supply of wafers to us, as a result of a natural disaster, climate change, water shortages, political unrest, military conflicts, geopolitical turmoil, trade tensions, government orders, medical epidemics, such as the COVID-19 pandemic, economic instability, equipment failure or other cause, could materially harm our business, customer relationships and results of operations.
Further, any substantial disruption in the contract manufacturing services that we utilize, including TSMC’s supply of wafers to us, as a result of a natural disaster, climate change, water shortages, political unrest, military conflicts, geopolitical turmoil, trade tensions, government orders, labor shortages, medical epidemics, such as the COVID-19 pandemic, economic instability, equipment failure or other cause, could materially harm our business, customer relationships and results of operations.
A successful cyber security attack involving our products could cause customers and potential customers to believe our services are ineffective or unreliable and result in, among other things, the loss of customers, unfavorable publicity, damage to our reputation, difficulty in marketing our products, allegations by our customers that we have not performed our contractual obligations and give rise to significant costs, including costs related to developing solutions or indemnification obligations under our agreements.
A successful cyber-attack involving our products could cause customers and potential customers to believe our services are ineffective or unreliable and result in, among other things, the loss of customers, unfavorable publicity, damage to our reputation, difficulty in marketing our products, allegations by our customers that we have not performed our contractual obligations and give rise to significant costs, including costs related to developing solutions or indemnification obligations under our agreements.
To date, we have not experienced a material event, however such event could disrupt our operations, delay production, shipments and revenue, result in us being unable to timely satisfy customer demand, expose us to claims by our customers, result in significant expense to repair or replace our affected facilities, and, in some instances, could significantly curtail our research and development efforts in a particular product area or target market.
To date, we have not experienced a material event, however such an event could disrupt our operations, delay production, shipments and revenue, result in us being unable to timely satisfy customer demand, expose us to claims by our customers, result in significant expense to repair or replace our affected facilities, and, in some instances, could significantly curtail our research and development efforts in a particular product area or target market.
Any acquisitions we may undertake, including the VMware Merger, and their integration involve risks and uncertainties, such as: • unexpected delays, challenges and related expenses, and disruption of our business; • diversion of management’s attention from daily operations and the pursuit of other opportunities; 19 Table of Contents • incurring significant restructuring charges and amortization expense, assuming liabilities (some of which may be unexpected) and ongoing or new lawsuits, potential impairment of acquired goodwill and other intangible assets, and increasing our expenses and working capital requirements; • the potential for deficiencies in internal controls at the acquired business, as well as implementing our own management information systems, operating systems and internal controls for the acquired operations; • our due diligence process may fail to identify significant issues with the acquired business’ products, financial disclosures, accounting practices, legal, tax and other contingencies, compliance with local laws and regulations (and interpretations thereof) in the U.S. and multiple international jurisdictions; • additional acquisition-related debt, which could increase our leverage and potentially negatively affect our credit ratings resulting in more restrictive borrowing terms or increased borrowing costs thereby limiting our ability to borrow; • dilution of stock ownership of existing stockholders; • difficulties integrating the acquired business or company and in managing and retaining acquired employees, vendors and customers; and • inaccuracies in our original estimates and assumptions used to assess a transaction, which may result in us not realizing the expected financial or strategic benefits of any such transaction.
Any acquisitions we may undertake, including the VMware Merger, and their integration involve risks and uncertainties, such as: • unexpected delays, challenges and related expenses, and disruption of our business; • diversion of management’s attention from daily operations and the pursuit of other opportunities; • incurring significant restructuring charges and amortization expense, assuming liabilities (some of which may be unexpected) and ongoing or new lawsuits, potential impairment of acquired goodwill and other intangible assets, and increasing our expenses and working capital requirements; • the potential for deficiencies in internal controls at the acquired business, as well as implementing our own management information systems, operating systems and internal controls for the acquired operations; • our due diligence process may fail to identify significant issues with the acquired business’ products, financial disclosures, accounting practices, legal, tax and other contingencies, compliance with local laws and regulations (and interpretations thereof) in the U.S. and multiple international jurisdictions; • additional acquisition-related debt, which could increase our leverage and potentially negatively affect our credit ratings resulting in more restrictive borrowing terms or increased borrowing costs thereby limiting our ability to borrow; • dilution of stock ownership of existing stockholders; • difficulties integrating the acquired business or company and in managing and retaining acquired employees, vendors and customers; and • inaccuracies in our original estimates and assumptions used to assess a transaction, which may result in us not realizing the expected financial or strategic benefits of any such transaction.
If any pending or future proceedings result in an adverse outcome, we could be required to: • cease the manufacture, use or sale of the infringing products, processes or technology and/or make changes to our processes or products; • pay substantial damages for past, present and future use of the infringing technology, including up to treble damages if willful infringement is found; 20 Table of Contents • expend significant resources to develop non-infringing technology; • license technology from the third-party claiming infringement, which license may not be available on commercially reasonable terms, or at all; • enter into cross-licenses with our competitors, which could weaken our overall IP portfolio and our ability to compete in particular product categories; • pay substantial damages to our direct or end customers to discontinue use or replace infringing technology with non-infringing technology; or • relinquish IP rights associated with one or more of our patent claims.
If any pending or future proceedings result in an adverse outcome, we could be required to: • cease the manufacture, use or sale of the infringing products, processes or technology and/or make changes to our processes or products; • pay substantial damages for past, present and future use of the infringing technology, including up to treble damages if willful infringement is found; • expend significant resources to develop non-infringing technology; • license technology from the third-party claiming infringement, which license may not be available on commercially reasonable terms, or at all; • enter into cross-licenses with our competitors, which could weaken our overall IP portfolio and our ability to compete in particular product categories; 23 Table of Contents • pay substantial damages to our direct or end customers to discontinue use or replace infringing technology with non-infringing technology; or • relinquish IP rights associated with one or more of our patent claims.
Furthermore, we do not hedge our exposure to commodity prices, some of which are very volatile, and sudden or prolonged increases in commodities prices may adversely affect our gross margin. Our gross margin may also be adversely affected if businesses or companies that we acquire have different gross margin profiles and by expenses related to such acquisitions.
Furthermore, we do not hedge our exposure to commodity prices, some of which are very volatile, and sudden or prolonged increases in commodity prices may adversely affect our gross margin. Our gross margin may also be adversely affected if businesses or companies that we acquire have different gross margin profiles and by expenses related to such acquisitions.
The U.S. government may also add companies to its restricted entity list and/or technologies to its list of prohibited exports to specific countries, which have had and will continue to have an adverse effect on our ability to sell our products and our revenue.
The U.S. government may also add companies to its restricted entity list and/or technologies to its list of prohibited exports to specific countries, which have had and may continue to have an adverse effect on our ability to sell our products and our revenue.
Failure of our software products to manage and secure IT infrastructures and environments could have a material adverse effect on our business. Certain aspects of our software products are intended to manage and secure IT infrastructures and environments, and as a result, we expect these products to be ongoing targets of cyber security attacks.
Failure of our software products to manage and secure IT infrastructures and environments could have a material adverse effect on our business. Certain aspects of our software products are intended to manage and secure IT infrastructures and environments, and as a result, we expect these products to be ongoing targets of cyber-attacks.
An escalation of trade tensions between the U.S. and China has resulted in trade restrictions and increased tariffs that harm our ability to participate in Chinese markets or compete effectively with Chinese companies.
An escalation of trade tensions between the U.S. and China has resulted in trade restrictions, increased protectionism and increased tariffs that harm our ability to participate in Chinese markets or compete effectively with Chinese companies.
If we fail to develop new and enhanced products and technologies, if we focus on technologies that do not become widely adopted, or if new competitive technologies that we do not support become widely accepted, demand for our products may be reduced.
If we fail to timely develop new and enhanced products and technologies, if we focus on technologies that do not become widely adopted, or if new competitive technologies that we do not support become widely accepted, demand for our products may be reduced.
We are unable to predict or assure that: • our IP rights will not lapse or be invalidated, circumvented, challenged, or, in the case of third-party IP rights licensed to us, be licensed to others; 24 Table of Contents • our IP rights will provide competitive advantages to us; • rights previously granted by third parties to IP licensed or assigned to us, including portfolio cross-licenses, will not hamper our ability to assert our IP rights or hinder the settlement of currently pending or future disputes; • any of our pending or future patent, trademark or copyright applications will be issued or have the coverage originally sought; • our IP rights will be enforced in certain jurisdictions where competition is intense or where legal protection may be weak; or • we have sufficient IP rights to protect our products or our business.
We are unable to predict or assure that: • our IP rights will not lapse or be invalidated, circumvented, challenged, or, in the case of third-party IP rights licensed to us, be licensed to others; • our IP rights will provide competitive advantages to us; • rights previously granted by third parties to IP licensed or assigned to us, including portfolio cross-licenses, will not hamper our ability to assert our IP rights or hinder the settlement of currently pending or future disputes; • any of our pending or future patent, trademark or copyright applications will be issued or have the coverage originally sought; • our IP rights will be enforced in certain jurisdictions where competition is intense or where legal protection may be weak; or • we have sufficient IP rights to protect our products or our business.
Any downgrade in our credit rating or the ratings of our indebtedness, or adverse conditions in the debt capital markets, could: • adversely affect the trading price of, or market for, our debt securities; • increase interest expense under our term facilities; • increase the cost of, and adversely affect our ability to refinance, our existing debt; and • adversely affect our ability to raise additional debt. 30 Table of Contents The instruments governing our indebtedness impose certain restrictions on our business.
Any downgrade in our credit rating or the ratings of our indebtedness, or adverse conditions in the debt capital markets, could: • adversely affect the trading price of, or market for, our debt securities; • increase interest expense under our term facilities; • increase the cost of, and adversely affect our ability to refinance, our existing debt; and • adversely affect our ability to raise additional debt. 32 Table of Contents The instruments governing our indebtedness impose certain restrictions on our business.
In addition to many of the risks described elsewhere in this “Risk Factors” section, these factors include, among others: • the timing of launches by our customers of new product in which our products are included and changes in end-user demand for our customers’ the products; • fluctuations in the levels of component or product inventories held by our customers; • the shift to cloud-based IT solutions and services, such as hyperscale computing, which may adversely affect the timing and volume of sales of our products for use in traditional enterprise data centers; • the timing of new software contracts and renewals, as well as the timing of any terminations of software contracts that require us to refund to customers any pre-paid amounts under the contract; • our ability to timely develop, introduce and market new products and technologies; • the timing and extent of our software license and subscription revenue, and other non-product revenue; • new product announcements and introductions by us or our competitors; • seasonality or other fluctuations in demand in our markets; • timing and amount of research and development and related new product expenditures, and the timing of receipt of any research and development grant monies; and • timing of any regulatory changes, particularly with respect to trade sanctions and customs duties and tariffs, and tax reform.
In addition to many of the risks described elsewhere in this “Risk Factors” section, these factors include, among others: • the timing of launches by our customers of new product in which our products are included and changes in end-user demand for our customers’ products; • fluctuations in the levels of component or product inventories held by our customers, which may lead to increased requests to delay shipment of our products; • the shift to cloud-based IT solutions and services, such as hyperscale computing, which may adversely affect the timing and volume of sales of our products for use in traditional enterprise data centers; • the timing of new software contracts and renewals, as well as the timing of any terminations of software contracts that require us to refund to customers any pre-paid amounts under the contract; • our ability to timely develop, introduce and market new products and technologies; • the timing and extent of our software license and subscription revenue, and other non-product revenue; • new product announcements and introductions by us or our competitors; • seasonality or other fluctuations in demand in our markets; • timing and amount of research and development and related new product expenditures, and the timing of receipt of any research and development grant monies; and • timing of any regulatory changes, particularly with respect to trade sanctions and customs duties and tariffs, and tax reform.
We believe aggregate sales, through all channels, to Apple and our top five end customers, accounted for approximately 20% and 35% of our net revenue for fiscal year 2022, respectively. This customer concentration increases the risk of quarterly fluctuations in our operating results and our sensitivity to any material, adverse developments experienced by our significant customers.
We believe aggregate sales, through all channels, to Apple and our top five end customers, accounted for approximately 20% and 35% of our net revenue for fiscal year 2023, respectively. This customer concentration increases the risk of quarterly fluctuations in our operating results and our sensitivity to any material adverse developments experienced by our significant customers.
During fiscal year 2022, we purchased approximately two-thirds of our manufacturing materials from five materials providers, some of which are single source suppliers. As certain materials are highly specialized, the lead time needed to identify and qualify a new supplier is typically lengthy and there is often no readily available alternative source.
During fiscal year 2023, we purchased approximately two-thirds of our manufacturing materials from five materials providers, some of which are single source suppliers. As certain materials are highly specialized, the lead time needed to identify and qualify a new supplier is typically lengthy and there is often no readily available alternative source.
We are not obligated to repurchase any specific amount of shares of common stock, and the stock repurchase program may be suspended or terminated at any time. 31 Table of Contents A substantial amount of our stock is held by a small number of large investors and significant sales of our common stock by one or more of these holders could cause our stock price to fall.
We are not obligated to repurchase any specific amount of shares of common stock, and the stock repurchase program may be suspended or terminated at any time. 33 Table of Contents A substantial amount of our stock is held by a small number of large investors and significant sales of our common stock by one or more of these holders could cause our stock price to fall.
If we do not successfully manage these issues and the other challenges inherent in integrating an acquired business, then we may not achieve the anticipated benefits of the VMware Merger on our anticipated timeframe or at all and our revenue, expenses, operating results, financial condition and stock price could be materially adversely affected.
If we do not successfully manage these issues and the other challenges inherent in integrating an acquired business, then we may not achieve the anticipated benefits of the VMware Merger within our anticipated timeframe or at all and our revenue, expenses, operating results, financial condition and stock price could be materially adversely affected.
A prolonged disruption at or shut-down of one or more of our manufacturing facilities or warehouses, especially our Colorado, Singapore, Malaysia and Pennsylvania facilities, or those of our CMs or suppliers, due to natural- or man-made disasters or other events outside of our control, such as equipment malfunction or widespread outbreaks of acute illness, including COVID-19, or for any other reason, would limit our capacity to meet customer demands and delay new product development until a replacement facility and equipment, if necessary, were found.
A prolonged disruption at or shut-down of one or more of our manufacturing facilities or warehouses, especially our Colorado, Singapore, Malaysia and Pennsylvania facilities, or those of our CMs or suppliers, due to natural- or man-made 22 Table of Contents disasters or other events outside of our control, such as equipment malfunction or widespread outbreaks of acute illness, including COVID-19, or for any other reason, would limit our capacity to meet customer demands and delay new product development until a replacement facility and equipment, if necessary, were found.
For example, if a country in which our products are manufactured or sold sets technical standards that are not widely shared, it may require us to stop distributing our products commercially until they comply with such new standards, lead certain of our customers to suspend imports of their products into that country, require manufacturers in that country to manufacture products with different technical standards and disrupt cross-border manufacturing relationships, any of which could have a material adverse effect on our business, financial condition and results of operations.
For example, if a country in which our products are manufactured or sold sets technical standards that are not widely shared, it may require us to stop distributing our products commercially until they comply with such new standards, lead certain of our customers to suspend imports of their products into that country, require manufacturers in that country to manufacture products with different technical standards and disrupt cross-border 16 Table of Contents manufacturing relationships, any of which could have a material adverse effect on our business, financial condition and results of operations.
Fluctuations in foreign exchange rates against the U.S. dollar could result in substantial changes in reported revenues and operating results due to the foreign exchange impact of translating these transactions into U.S. dollars. In the normal course of business, we employ various hedging strategies to partially mitigate these risks, including the use of derivative instruments.
Fluctuations in foreign exchange rates against the U.S. dollar could result in substantial changes in reported revenues and operating results due to the foreign exchange impact of remeasuring these transactions into U.S. dollars. In the normal course of business, we employ various hedging strategies to partially mitigate these risks, including the use of derivative instruments.
Any failure to adjust spending quickly enough to compensate for a revenue shortfall could magnify the adverse impact of such revenue shortfall on our results of operations. As a result, we believe that quarter-to-quarter comparisons of our revenue and operating results may not be meaningful or a reliable indicator of our future performance.
Any failure to adjust spending quickly enough to compensate for a revenue shortfall could magnify the adverse impact of such revenue shortfall on our results of operations. As a result, we believe that quarter-to-quarter comparisons of our revenue and operating results may not be meaningful or reliable indicators of our future performance.
From time to time, these factors, together with changes in general economic conditions, cause significant upturns and downturns in the industry in general, and in our business in particular. The industry recently experienced a significant upturn due to the supply imbalance that resulted in record profitability and increases in average selling prices.
From time to time, these factors, together with changes in general economic conditions, cause significant upturns and downturns in the industry in general, and in our business in particular. The industry previously experienced a significant upturn due to a supply imbalance that resulted in record profitability and increases in average selling prices.
The book minimum tax will first apply to our fiscal year 2024 and any increase in our effective tax rate or cash tax will depend on a number of factors, including any offsets for foreign tax credits or general business credits, or changes in book income following business combinations.
This book minimum tax will first apply to our fiscal year 2024 and any increase in our effective tax rate or cash tax will depend on a number of factors, including any offsets for foreign tax credits or general business credits, or changes in book income following business combinations.
The effects of any such changes could subject us to higher taxes and our earnings, results of operations and cash flow would be adversely affected. In addition, we are subject to, and are under, tax audit in various jurisdictions, and such jurisdictions may assess additional income tax against us.
The effects of any such changes could subject us to higher taxes and our earnings, results of operations and cash flow would be adversely affected. Further, we are subject to, and are under, tax audit in various jurisdictions, and such jurisdictions may assess additional income tax against us.
The U.S. also enacted the Inflation Reduction Act of 2022 (“IRA”) in August 2022, which creates a new book minimum tax of at least 15% of consolidated GAAP pre-tax income for corporations with average book income in excess of $1 billion.
The U.S. also enacted the Inflation Reduction Act of 2022 (“IRA”) in August 2022, which created a new book minimum tax of at least 15% of consolidated GAAP pre-tax income for corporations with average book income in excess of $1 billion.
We make substantial investments in research and development and unsuccessful investments could materially adversely affect our business, financial condition and results of operations. The industries in which we compete are characterized by rapid technological change, changes in customer requirements, frequent new product introductions and enhancements, short product cycles and evolving industry standards, and new delivery methods.
We make substantial investments in research and development and unsuccessful investments could materially adversely affect our business, financial condition and results of operations. The industries in which we compete are characterized by rapid technological change, changes in customer requirements, frequent new product introductions and enhancements, short product cycles and evolving industry standards, and new 28 Table of Contents delivery methods.
In addition, current and future changes to the U.S. and foreign regulatory approval process and requirements related to acquisitions, including the VMware Merger, may cause approvals to take longer than anticipated, not be forthcoming or contain burdensome conditions, which may prevent the transaction or jeopardize, delay or reduce the anticipated benefits of the transaction, and impede the execution of our business strategy.
In addition, current and future changes to the U.S. and foreign regulatory approval process and requirements related to acquisitions may cause approvals to take longer than anticipated, not be forthcoming or contain burdensome conditions, which may prevent the transaction or jeopardize, delay or reduce the anticipated benefits of the transaction, and impede the execution of our business strategy.
As the source of our technological and product innovations, our engineering and technical personnel (including cyber security experts) are a significant asset. Competition for these employees is significant in many areas of the world in which we operate, particularly 18 Table of Contents in Silicon Valley and Southeast Asia where qualified engineers are in high demand.
As the source of our technological and product innovations, our engineering and technical personnel (including cyber security experts) are a significant asset. Competition for these employees is significant in many areas of the world in which we operate, particularly in Silicon Valley and Southeast Asia where qualified engineers are in high demand.
These factors include: • changes in political, regulatory, legal or economic conditions or geopolitical turmoil (including China-Taiwan relations), including terrorism, war or political or military coups, state-sponsored or politically motivated cyber-attacks, or civil disturbances or political instability foreign and domestic; • restrictive governmental actions, such as restrictions on the transfer or repatriation of funds and foreign investments, data privacy regulations, imposition of climate change regulations, and trade protection measures, including increasing protectionism, import/export restrictions (including with regards to advanced technologies), import/export duties and quotas, trade sanctions and customs duties and tariffs, all of which have increased in recent years; • difficulty in obtaining product distribution and support, and transportation delays; • potential inability to localize software products; • difficulty in conducting due diligence with respect to business partners; • public health or safety concerns, medical epidemics or pandemics, such as COVID-19, and other natural- or man-made disasters; • nationalization of businesses and expropriation of assets; and • changes in U.S. and foreign tax laws.
These factors include: • changes in political, regulatory, legal or economic conditions or geopolitical turmoil (including China-Taiwan relations), including terrorism, war or political or military coups, state-sponsored or politically motivated cyber-attacks, or civil disturbances or political instability (foreign and domestic); • restrictive governmental actions, such as restrictions on the transfer or repatriation of funds and foreign investments, data privacy regulations, imposition of climate change regulations, and trade protection measures, including increasing protectionism, import/export restrictions (including with regards to advanced technologies), import/export duties and quotas, trade sanctions and customs duties and tariffs, all of which have increased in recent years; • difficulty in obtaining product distribution and support, and transportation delays; • potential inability to localize software products; • difficulty in enforcing contracts, collecting accounts receivables and maintaining appropriate financial control; • difficulty in conducting due diligence with respect to business partners; • public health or safety concerns, medical epidemics or pandemics, such as COVID-19, and other natural- or man-made disasters; • nationalization of businesses and expropriation of assets; and • changes in U.S. and foreign tax laws.
In addition, many countries are implementing legislation and other guidance to align their international tax rules with the Organisation for Economic Co-operation and Development’s (“OECD”) Base Erosion and Profit Shifting recommendations and action plan that aim to standardize and modernize global corporate tax policy, including changes to cross-border tax, transfer pricing documentation rules, and nexus-based tax incentive practices.
In addition, many countries are implementing legislation and other guidance to align their international tax rules with the Organisation for Economic Co-operation and Development’s (“OECD”) Base Erosion and Profit Shifting recommendations and 30 Table of Contents action plan that aim to standardize and modernize global corporate tax policy, including changes to cross-border tax, transfer pricing documentation rules, and nexus-based tax incentive practices.
Sustained uncertainty about, or worsening of, current global economic conditions and further escalation of trade tensions between the U.S. and its trading partners, especially China, and possible 14 Table of Contents decoupling of the U.S. and China economies, could result in a global economic slowdown and long-term changes to global trade.
Sustained uncertainty about, or worsening of, current global economic conditions and further escalation of trade tensions between the U.S. and its trading partners, especially China, and possible decoupling of the U.S. and China economies, could result in a global economic slowdown and long-term changes to global trade.
Accidental or willful security breaches or other unauthorized access to our information systems or the systems of our service providers, or the existence of computer viruses or malware (such as ransomware) in our or their data or software could expose us to a risk of information loss, business disruption, and misappropriation of proprietary and confidential information, including information relating to our products or customers and the personal information of our employees or third parties.
Accidental or willful security breaches or other unauthorized access to our information systems or the systems of our service providers and business partners, or the existence of computer viruses or malware (such as ransomware) in our or their data or software have in the past, and could in the future, expose us to a risk of information loss, business disruption, and misappropriation of proprietary and confidential information, including information relating to our products or customers and the personal information of our employees or third parties.
For a more complete discussion of the material risks facing our business, see below. Risks Related to Our Business Adverse global economic conditions could have a negative effect on our business, results of operations and financial condition and liquidity.
For a more complete discussion of the material risks facing our business, see below. 15 Table of Contents Risks Related to Our Business Adverse global economic conditions could have a negative effect on our business, results of operations and financial condition and liquidity.
If actual demand for our products is lower than forecast, we may also experience higher inventory carrying and operating costs and product obsolescence. Because certain of our sales, research and development, and internal manufacturing overhead expenses are relatively fixed, a reduction in customer demand may also decrease our gross margin and operating income.
Conversely, if actual sales of our products is lower than expected, we may also experience higher inventory carrying and operating costs and product obsolescence. Because certain of our sales, research and development, and internal manufacturing overhead expenses are relatively fixed, a reduction in customer demand may also decrease our gross margin and operating income.
Additionally, our calculations of income taxes payable currently and on a deferred basis are based on our interpretations of applicable tax laws in the jurisdictions in which 29 Table of Contents we are required to file tax returns.
Additionally, our calculations of income taxes payable currently and on a deferred basis are based on our interpretations of applicable tax laws in the jurisdictions in which we are required to file tax returns.
Our substantial indebtedness could have important consequences including: • increasing our vulnerability to adverse general economic and industry conditions; • exposing us to interest rate risk due to our variable rate term facilities, which we do not typically hedge against; • limiting our flexibility in planning for, or reacting to, changes in the economy and the semiconductor industry; • placing us at a competitive disadvantage compared to our competitors with less indebtedness; • making it more difficult to borrow additional funds in the future to fund growth, acquisitions, working capital, capital expenditures and other purposes; and • potentially requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund our other business needs.
Our substantial indebtedness could have important consequences including: • increasing our vulnerability to adverse general economic and industry conditions; • exposing us to interest rate risk as our 2023 Term Loans bear floating interest rates, which we do not typically hedge against; • limiting our flexibility in planning for, or reacting to, changes in the economy and the semiconductor industry; • placing us at a competitive disadvantage compared to our competitors with less indebtedness; • making it more difficult to borrow additional funds in the future to fund growth, acquisitions, working capital, capital expenditures and other purposes; and • potentially requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund our other business needs.
Significant technical challenges also arise with our software products because our customers license and deploy our products across a variety of computer platforms and integrate them with a number of third-party software 26 Table of Contents applications and databases.
Significant technical challenges also arise with our software products because our customers license and deploy our products across a variety of computer platforms and integrate them with a number of third-party software applications and databases.
Since the techniques used to obtain unauthorized access to systems, or to otherwise sabotage them, change frequently and are often not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.
Since the techniques used to obtain unauthorized access to systems, or to otherwise sabotage them, change frequently and are often not recognized until launched against a target, we 19 Table of Contents may be unable to anticipate these techniques or to implement adequate preventative measures.
Our Fort Collins and Breinigsville facilities are the sole sources for the FBAR components used in many of our wireless devices and for the indium phosphide-based wafers used in our fibre optics products, respectively.
Our Fort Collins and Breinigsville facilities are the sole sources for the FBAR components used in many of our wireless devices and for the InP-based wafers used in our fibre optics products, respectively.
If we cannot offset industry or market downturns, our net revenue may decline and our financial condition and results of operations may suffer. The majority of our sales come from a small number of customers and a reduction in demand or loss of one or more of our significant customers may adversely affect our business.
If we cannot offset industry or market downturns, our net revenue may decline and our financial condition and results of operations may suffer. 20 Table of Contents The majority of our sales have historically come from a small number of customers and a reduction in demand or loss of one or more of our significant customers may adversely affect our business.
Conversely, periods of robust demand that create a supply imbalance, as we have seen recently, can lead to higher gross margins that may not be sustainable over the longer term. In addition, semiconductor manufacturing requires significant capital investment, leading to high fixed costs, including depreciation expense.
Conversely, periods of robust demand that create a supply imbalance can lead to higher gross margins that may not be sustainable over the longer term. In addition, semiconductor manufacturing requires significant capital investment, leading to high fixed costs, including depreciation expense.
We do not generally have long-term contracts with our materials providers and substantially all of our purchases are on a purchase order basis.
We do not generally have long-term 21 Table of Contents contracts with our materials providers and substantially all of our purchases are on a purchase order basis.
A majority of our products are produced, sourced and sold internationally and our international revenue represents a significant percentage of our overall revenue. In addition, as of October 30, 2022, nearly 49% of our employees were located outside the U.S.
A majority of our products are produced, sourced and sold internationally and our international revenue represents a significant percentage of our overall revenue. In addition, as of October 29, 2023, nearly 49% of our employees were located outside the U.S.
Although we monitor our use of such open source code to avoid subjecting our products to unintended conditions, such use, under certain circumstances, could materially adversely affect our business, financial condition and operating results and cash flow, including if we are required to take remedial action that may divert resources away from our development efforts.
Although we monitor our use of open source software to avoid subjecting our products to unintended conditions and exposing us to unacceptable financial risk, such use, under certain circumstances, could materially adversely affect our business, financial condition and operating results and cash flow, including if we are required to take remedial action that may divert resources away from our development efforts.
Sales to distributors accounted for 56% of our net revenue in the fiscal year ended October 30, 2022 and are subject to a number of risks, including: • fluctuations in demand based on our distributors’ product inventory levels and end customer demand; • our distributors and other channel partners are generally not subject to minimum sales requirements or any obligation to market our products to their customers; • our distributors and other channel partners agreements are generally nonexclusive and may be terminated at any time without cause; • our lack of control over the timing of delivery of our products to end customers; and • our distributors and other channel partners may market and distribute competing products and may place greater emphasis on the sale of these products.
Sales to distributors accounted for 57% of our net revenue in the fiscal year ended October 29, 2023 and are subject to a number of risks, including: 18 Table of Contents • fluctuations in demand based on our distributors’ product inventory levels and end customer demand; • our distributors and other channel partners are generally not subject to minimum sales requirements or any obligation to market our products to their customers; • our distributors and other channel partners agreements are generally nonexclusive and may be terminated at any time without cause; • our lack of control over the timing of delivery of our products to end customers; and • our distributors and other channel partners may market and distribute competing products and may place greater emphasis on the sale of these products.
In addition, as part of their corporate social and environmental responsibility programs, an increasing number of OEMs are seeking to source products that do not contain minerals sourced from areas where proceeds from the sale of such minerals are likely to be used to fund armed conflicts, such as in the Democratic Republic of Congo.
In addition, as part of their ESG programs, an increasing number of OEMs are seeking to source products that do not contain minerals sourced from areas where proceeds from the sale of such minerals are likely to be used to fund armed conflicts, such as in the Democratic Republic of Congo.
In addition, various jurisdictions are developing climate change-based laws or regulations that could cause us to incur additional direct costs for compliance, as well as indirect costs resulting from our customers, suppliers, or both incurring additional compliance costs that are passed on to us.
In addition, various jurisdictions are developing climate-related laws or regulations that could cause us to incur additional direct costs for compliance, as well as indirect costs resulting from our customers, suppliers, or additional compliance costs that are passed on to us.
As of September 30, 2022, we believe 10 of our 20 largest holders of common stock were active institutional investors who held approximately 27% of our outstanding shares of common stock in the aggregate. These investors may sell their shares at any time for a variety of reasons and such sales could depress the market price of our common stock.
As of September 29, 2023, we believe 10 of our 20 largest holders of common stock were active institutional investors who held 23% of our outstanding shares of common stock in the aggregate. These investors may sell their shares at any time for a variety of reasons and such sales could depress the market price of our common stock.
A significant legal risk associated with conducting business internationally is compliance with the various and differing laws and regulations of the many countries in which we do business. In addition, the laws in various countries are constantly evolving and may, in some cases, conflict with each other.
A significant legal risk associated with conducting business internationally is compliance with the various and differing laws and regulations of the many countries in which we do business. In addition, the laws in various countries are constantly evolving and may, in some cases, conflict with each other or with agreements we have made in one or more jurisdictions.
Although we expect significant benefits to result from the VMware Merger, there can be no assurance that we will actually realize any of them, or realize them within the anticipated timeframe. Achieving these benefits will depend, in part, on our ability to integrate VMware's business successfully and efficiently.
Although we expect significant benefits to result from the VMware Merger, there can be no assurance that we will actually realize these benefits. Achieving these benefits will depend, in part, on our ability to integrate VMware's business successfully and efficiently.
This could also result in litigation for alleged failure to meet our obligations, payment of significant damages, and our net revenue could decline, adversely affecting our business, financial condition, results of operations and gross margin.
This could damage our relationships with our customers or result in litigation for alleged failure to meet our obligations, payment of significant damages, and our net revenue could decline, adversely affecting our business, financial condition, results of operations and gross margin.
Geopolitical instability, such as Russia’s invasion of Ukraine, may increase the likelihood that we will experience direct or collateral consequences from cyber conflicts between nation-states or other politically motivated actors targeting critical technology infrastructure.
Geopolitical instability may increase the likelihood that we will experience direct or collateral consequences from cyber conflicts between nation-states or other politically motivated actors targeting critical technology infrastructure.
We may be required to incur significant expense to comply with, or to remedy violations of, these regulations. In addition, if our customers fail to comply with these regulations, we may be required to suspend sales to these customers, which could damage our reputation and negatively impact our results of operations.
In addition, if our customers fail to comply with these regulations, we may be required to suspend sales to these customers, which could damage our reputation and negatively impact our results of operations.
These liabilities could be substantial and may include, among other things, the cost of defending lawsuits against these individuals, as well as stockholder derivative suits; civil or criminal fines and penalties; legal and other expenses; and expenses associated with the remedial measure, if any, which may be imposed. Our operating results are subject to substantial quarterly and annual fluctuations.
These liabilities could be substantial and may include, among other things, the cost of defending lawsuits against these individuals, as well as stockholder derivative suits; civil or criminal fines and penalties; legal and other expenses; and expenses associated with the remedial measure, if any, which may be imposed.
Despite our internal controls and investment in security measures, we have, from time to time, been subject to disruptive cyber-attacks or there have been attempts of unauthorized network intrusions and malware on our own IT networks.
Despite our internal controls and investment in security measures, we have, from time to time, been subject to disruptive cyber-attacks and unauthorized network intrusions and malware on our own IT networks or those of our service providers or business partners.
From time to time, we may need to obtain additional IP licenses or renew existing license agreements. We are unable to predict whether these license agreements can be obtained or renewed on acceptable terms or at all.
From time to time, we may need to obtain additional IP licenses or renew existing license agreements. We are unable to predict whether these license agreements can be obtained or renewed on acceptable terms or at all. We are subject to warranty claims, product recalls and product liability.
Any such event could adversely impact our revenue and results of operations. See also “ An impairment of the confidentiality, integrity, or availability of our IT systems, or those of one or more of our corporate infrastructure vendors, could have a material adverse effect on our business ”. We are subject to warranty claims, product recalls and product liability.
Any such event could adversely impact our revenue and results of operations. See also “ An impairment of the confidentiality, integrity, or availability of our IT systems, or those of one or more of our corporate infrastructure vendors, could have a material adverse effect on our business ”.
Our tax incentives and tax holiday, before taking into consideration U.S. foreign tax credits, decreased the provision for income taxes by approximately $1,821 million in the aggregate and increased diluted net income per share by $4.31 for fiscal year 2022.
Our tax incentives and tax holiday, before taking into consideration U.S. foreign tax credits, decreased the provision for income taxes by approximately $2,104 million in the aggregate and increased diluted net income per share by $4.93 for fiscal year 2023.
For example, due to the COVID-19 pandemic, we have experienced some supply constraints and increases in prices, including with respect to wafers and substrates. Additionally, the supply of these materials may be negatively impacted by increased trade tensions between the U.S. and its trading partners, particularly China.
For example, macroeconomic and geopolitical conditions, as well as the COVID-19 pandemic, caused some supply constraints and increases in prices, including with respect to wafers and substrates. Additionally, the supply of these materials may be negatively impacted by increased trade tensions between the U.S. and its trading partners, particularly China.
As a result of this heightened scrutiny, prior decisions by tax authorities regarding treatments and positions of corporate income taxes could be subject to enforcement activities, and legislative investigation and inquiry, which could also result in changes in tax policies or prior tax rulings. Any such changes may also result in the taxes we previously paid being subject to change.
As a result of this heightened scrutiny, prior decisions by tax authorities regarding treatments and positions of corporate income taxes could be subject to enforcement activities, and legislative investigation and inquiry, which could also result in changes in tax policies or prior tax rulings.
Conversely, customers often require rapid increases in production on short notice. If we are unable to meet such increases in demand, this could damage our customer relationships, reduce revenue growth and margins, subject us to additional liabilities, harm our reputation, and prevent us from taking advantage of opportunities.
If we are unable to meet such increases in demand, this could damage our customer relationships, reduce revenue growth and margins, subject us to additional liabilities, harm our reputation, and prevent us from taking advantage of opportunities.
Some of our products contain software from open source code sources, the use of which may subject us to certain conditions, including the obligation to offer such products for no cost or to make the proprietary source code of those products publicly available.
Many of our products and services incorporate open source software, the use of which may subject us to certain conditions, including the obligation to offer such products for no cost or to make the proprietary source code of those products publicly available.
It is possible that this recent industry up-cycle will be followed by a downturn, and historically, such down-cycles have been characterized by diminished demand for end-user products, high inventory levels and periods of inventory adjustment, under-utilization of manufacturing capacity, changes in revenue mix, accelerated erosion of average selling prices and elimination of expedite fees leading to reduced profitability and a decline in our stock price.
The industry, however is currently experiencing a downturn, and historically, such down-cycles have been characterized by diminished demand for end-user products, high inventory levels and periods of inventory adjustment, under-utilization of manufacturing capacity, changes in revenue mix, accelerated erosion of average selling prices and elimination of expedite fees leading to reduced profitability and a decline in our stock price.
If (i) the U.S. tax rate increases, (ii) the deduction allowable under the GILTI regime is further reduced or eliminated, (iii) additional limitations are put on our ability to deduct interest expense, or (iv) the requirement for research and development costs to be capitalized beginning in fiscal year 2023 remains in effect, our provision for income taxes, net income, and cash flows would be adversely impacted.
If (i) the U.S. tax rate increases, (ii) the deduction allowable under the GILTI regime is further reduced or eliminated, or (iii) additional limitations are put on our ability to deduct interest expense, our provision for income taxes, net income, and cash flows would be adversely impacted.
ITEM 1A. RISK FACTORS Our business, operations and financial results are subject to various risks and uncertainties, including those described below, that could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock. Many of the following risks and uncertainties are, and may continue to be, exacerbated by the COVID-19 pandemic.
ITEM 1A. RISK FACTORS Our business, operations and financial results are subject to various risks and uncertainties, including those described below, that could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock.
We expect this trend to continue, which may result in combined competitors having greater resources than us. Some of our competitors may also receive financial and other support from their home country government or may have a greater presence in key markets, a larger customer base, a more comprehensive IP portfolio or better patent protection than us.
Some of our competitors may also receive financial and other support from their home country government or may have a greater presence in key markets, a larger customer base, a more comprehensive IP portfolio or better patent protection than us.
We are dependent on a small number of end customers, OEMs, their respective contract manufacturers (“CMs”), and certain distributors for a majority of our business and revenue. For fiscal year 2022, sales to distributors accounted for 56% of our net revenue.
We have historically depended on a small number of end customers, OEMs, their respective contract manufacturers (“CMs”) and certain distributors for a majority of our business and revenue. For fiscal year 2023, sales to distributors accounted for 57% of our net revenue.
These legal and regulatory requirements, as well as investor expectations, on corporate environmental and social responsibility practices and disclosure, are subject to change, can be unpredictable, and may be difficult and expensive for us to comply with, given the complexity of our supply chain and our significant outsourced manufacturing.
These legal and regulatory requirements, as well as investor expectations on ESG practices and disclosures, are subject to change, can be unpredictable, and may be difficult and expensive for us to comply 29 Table of Contents with, given the complexity of our supply chain and our outsourced manufacturing.
As lead times to identify, qualify and establish reliable production at acceptable yields with a new CM is typically lengthy, there is often no readily available alternative source and there may be other constraints on our ability to change CMs.
As lead times to identify, qualify and establish reliable production at acceptable yields with a new CM is typically lengthy, there is often no readily available alternative source and there may be other constraints on our ability to change CMs. In addition, qualifying new CMs is often expensive, and they may not produce products as cost-effectively as our current suppliers.
Although no such cyber security incidents have been material to Broadcom, we continue to devote resources to protect our systems and data from unauthorized access or misuse, and we may be required to expend greater resources in the future. U.S. and foreign regulators have also increased their focus on cyber security vulnerabilities and risks.
Although no such cyber security incidents have been material to Broadcom, we continue to devote resources to protect our systems and data from unauthorized access or misuse, and we may be required to expend greater resources in the future.
The loss of these licenses or the inability to 25 Table of Contents maintain any of them on commercially acceptable terms could delay development of future products or the enhancement of existing products. Certain software we use is from open source code sources, which, under certain circumstances could materially adversely affect our business, financial condition, operating results and cash flow.
The loss of these licenses or the inability to maintain any of them on commercially acceptable terms could delay development of future products or the enhancement of existing products. Our use of open source software in certain products and services could materially adversely affect our business, financial condition, operating results and cash flow.
We also face competition from numerous smaller companies that specialize in specific aspects of the highly fragmented software industry, open source authors who provide software and IP for free, competitors who offer their products through try-and-buy or freemium models, and customers who develop competing products. In addition, the trend toward consolidation is changing the competitive landscape.
We also face competition from public cloud 26 Table of Contents providers, numerous smaller companies that specialize in specific aspects of the highly fragmented software industry, open source authors who provide software and IP for free, competitors who offer their products through try-and-buy or freemium models, and customers who develop competing products.
The challenges involved in this integration, which will be complex and time consuming, include the following: • preserving customer and other important relationships of VMware and attracting new business and operational relationships; • integrating financial forecasting and controls, procedures and reporting cycles; • consolidating and integrating corporate, information technology, finance and administrative infrastructures; • coordinating sales and marketing efforts to effectively position our capabilities; • coordinating and integrating operations in countries in which we have not previously operated; and • integrating employees and related HR systems and benefits, maintaining employee morale and retaining key employees.
The challenges involved in this integration, which are complex and time consuming, include the following: • preserving customer and other important relationships of VMware and attracting new business and operational relationships; • integrating financial forecasting and controls, procedures and reporting cycles; • consolidating and integrating corporate, information technology, finance and administrative infrastructures; • coordinating sales and marketing efforts to effectively position our capabilities; • coordinating and integrating operations in countries in which we have not previously operated; 17 Table of Contents • reorienting the VMware sales and marketing force to align with the change in strategy and effectively position the business; and • integrating the VMware workforce, including managing employee transitions and attrition, maintaining employee morale and retaining key employees.
Risks Relating to Taxes • Changes in tax legislation or policies could materially impact our financial position and results of operations. • Our corporate income taxes could significantly increase if we are unable to maintain our tax concessions or if our assumptions and interpretations regarding tax laws and concessions prove to be incorrect. • Our income taxes and overall cash tax costs are affected by a number of factors that could materially, adversely affect financial results.
Risks Relating to Taxes • Changes in tax legislation or policies could materially impact our financial position and results of operations. • Our corporate income taxes could significantly increase if we are unable to maintain our tax concessions or if our assumptions and interpretations regarding tax laws and concessions prove to be incorrect. • Our income taxes and overall cash tax costs are affected by a number of factors that could materially, adversely affect financial results. • We have potential tax liabilities as a result of VMware’s former controlling ownership by Dell, which could have an adverse effect on our financial condition and operating results.
Involvement in regulatory investigations or inquiries, can be costly, lengthy, complex and time consuming, diverting the attention and energies of our management and technical personnel. 16 Table of Contents If any pending or future governmental investigations result in an unfavorable resolution, we could be required to cease the manufacture and sale of the subject products or technology, pay fines or disgorge profits or other payments, and/or cease certain conduct and/or modify our contracting or business practices, which could have a material adverse effect on our business, financial condition and results of operations.
If any pending or future governmental investigations result in an unfavorable resolution, we could be required to cease the manufacture and sale of the subject products or technology, pay fines or disgorge profits or other payments, and/or cease certain conduct and/or modify our contracting or business practices, which could have a material adverse effect on our business, financial condition and results of operations.
Our gross margin is highly dependent on product mix, which is susceptible to seasonal and other fluctuations in our markets. A shift in sales mix away from our higher margin products, as well as the timing and amount of our software licensing and non-product revenue, could adversely affect our future gross margin percentages.
A shift in sales mix away from our higher margin products, as well as the timing and amount of our software licensing and non-product revenue, could adversely affect our future gross margin percentages.
These risks are exacerbated by the fact that many of our products, and the end products into which our products are incorporated, often have very short life cycles. Competition in our industries could prevent us from growing our revenue.
These risks are exacerbated by the fact that many of our products, and the end products into which our products are incorporated, often have very short life cycles.
As a result, our semiconductor products may be used in applications for which they were not necessarily designed or tested, including, for example, medical devices, and they may not perform as anticipated in such applications.
We do not always have a direct relationship with the end customers of our products. As a result, our semiconductor products may be used in applications for which they were not necessarily designed or tested, including, for example, medical devices, and they may not perform as anticipated in such applications.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of October 30, 2022, our owned and leased facilities in excess of 100,000 square feet consisted of: (In square feet) United States Other Countries Total Owned facilities 1 2,586,368 928,888 3,515,256 Leased facilities 2 796,508 1,310,661 2,107,169 Total facilities 3,382,876 2,239,549 5,622,425 _______________ 1 Includes 318,000 square feet and 153,000 square feet of property owned in Malaysia subject to a 60-year land lease with the state authority expiring in May 2051 and March 2077, respectively, subject to renewal at our option. 2 Building leases expire on varying dates through February 2046 and generally include renewals at our option.
Biggest changeAs of October 29, 2023, our owned and leased facilities in excess of 100,000 square feet consisted of: (In square feet) United States Other Countries Total Owned facilities (a) 2,586,368 928,888 3,515,256 Leased facilities (b) 796,508 1,309,667 2,106,175 Total facilities 3,382,876 2,238,555 5,621,431 _______________ (a) Includes 318,000 square feet and 153,000 square feet of property owned in Malaysia subject to a 60-year land lease with the state authority expiring in May 2051 and March 2077, respectively, subject to renewal at our option.
ITEM 2. PROPERTIES We are headquartered in San Jose, California and our primary warehouse is located in Malaysia. We conduct our administration, manufacturing, research and development, sales and marketing in both owned and leased facilities. We believe that our owned and leased facilities are adequate for our present operations. We do not identify or allocate assets by operating segment.
ITEM 2. PROPERTIES We are headquartered in Palo Alto, California and our primary warehouse is located in Malaysia. We conduct our administration, manufacturing, research and development, sales and marketing in both owned and leased facilities. We believe that our owned and leased facilities are adequate for our present operations. We do not identify or allocate assets by operating segment.
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(b) Building leases expire on varying dates through February 2046 and generally include renewals at our option.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS The information set forth under Note 14. “Commitments and Contingencies” included in Part II, Item 8. of this Annual Report on Form 10-K, is incorporated herein by reference. For an additional discussion of certain risks associated with legal proceedings, see “Risk Factors” above. ITEM 4. MINE SAFETY DISCLOSURES None. 32 Table of Contents PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS The information set forth under Note 13. “Commitments and Contingencies” included in Part II, Item 8. of this Annual Report on Form 10-K, is incorporated herein by reference. For an additional discussion of certain risks associated with legal proceedings, see “Risk Factors” above. ITEM 4. MINE SAFETY DISCLOSURES None. 34 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities During the fiscal quarter ended October 30, 2022, we paid approximately $274 million in employee withholding taxes due upon the vesting of net settled equity awards. We withheld approximately 1 million shares of common stock from employees in connection with such net share settlement at an average price of $502.62 per share.
Biggest changeWe withheld approximately 1 million shares of common stock from employees in connection with such net share settlement at an average price of $852.93 per share. These shares may be deemed to be “issuer purchases” of shares and are not included in this table.
The total return graph and table assume that $100 was invested on October 27, 2017 (the last trading day of our fiscal year 2017) in each of Broadcom Inc. common stock, the S&P 500 Index and the NASDAQ 100 Index and assume that all dividends are reinvested. Indexes are calculated on a month-end basis.
The total return graph and table assume that $100 was invested on November 2, 2018 (the last trading day of our fiscal year 2018) in each of Broadcom Inc. common stock, the S&P 500 Index and the NASDAQ 100 Index and assume that all dividends are reinvested. Indexes are calculated on a month-end basis.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Broadcom common stock is listed on The Nasdaq Global Select Market under the symbol “AVGO”. Holders As of November 25, 2022, there were 1,060 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Broadcom common stock is listed on The Nasdaq Global Select Market under the symbol “AVGO”. Holders As of November 24, 2023, there were 1,389 holders of record of our common stock.
During fiscal year 2022, we repurchased and retired approximately 12 million shares of our common stock for $7 billion under this stock repurchase program. In May 2022, our Board of Directors authorized another stock repurchase program to repurchase up to an additional $10 billion of our common stock from time to time through December 31, 2023.
In May 2022, our Board of Directors authorized another stock repurchase program to repurchase up to an additional $10 billion of our common stock from time to time through December 31, 2023 (“May 2022 Authorization”).
Comparison of Five Year Cumulative Total Return Among Broadcom Inc., the S&P 500 Index and the NASDAQ 100 Index October 29, 2017 November 4, 2018 November 3, 2019 November 1, 2020 October 31, 2021 October 30, 2022 Broadcom Inc. $ 100.00 $ 89.74 $ 125.30 $ 154.78 $ 242.74 $ 222.41 S&P 500 Index $ 100.00 $ 107.58 $ 123.66 $ 134.35 $ 192.01 $ 165.18 NASDAQ 100 Index $ 100.00 $ 113.29 $ 134.24 $ 183.52 $ 265.05 $ 194.63 The graph and the table above shall not be deemed “filed” with the SEC for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by us with the SEC, regardless of any general incorporation language in such filing.
Comparison of Five Year Cumulative Total Return Among Broadcom Inc., the S&P 500 Index and the NASDAQ 100 Index November 4, 2018 November 3, 2019 November 1, 2020 October 31, 2021 October 30, 2022 October 29, 2023 Broadcom Inc. $ 100.00 $ 139.62 $ 172.47 $ 270.48 $ 247.83 $ 451.15 S&P 500 Index $ 100.00 $ 114.95 $ 124.89 $ 178.49 $ 153.55 $ 164.78 NASDAQ 100 Index $ 100.00 $ 118.49 $ 161.99 $ 233.96 $ 171.79 $ 212.82 The graph and the table above shall not be deemed “filed” with the SEC for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by us with the SEC, regardless of any general incorporation language in such filing.
Repurchases under our stock repurchase programs may be effected through a variety of methods, including open market or privately negotiated purchases. The timing and amount of shares repurchased will depend on the stock price, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, acquisition opportunities, and other factors.
The timing and amount of shares repurchased will depend on the stock price, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, acquisition opportunities, and other factors. We are not obligated to repurchase any specific amount of shares of common stock, and the stock repurchase programs may be suspended or terminated at any time.
We are not obligated to repurchase any specific amount of shares of common stock, and the stock repurchase programs may be suspended or terminated at any time. 33 Table of Contents Stock Performance Graph The following graph shows a comparison of cumulative total return for our common stock, the Standard & Poor’s 500 Stock Index (the “S&P 500 Index”) and the NASDAQ 100 Index for the five fiscal years ended October 30, 2022.
(b) Represents fewer than 0.1 million shares. 35 Table of Contents Stock Performance Graph The following graph shows a comparison of cumulative total return for our common stock, the Standard & Poor’s 500 Stock Index (the “S&P 500 Index”) and the NASDAQ 100 Index for the five fiscal years ended October 29, 2023.
These shares may be deemed to be “issuer purchases” of shares. In December 2021, our Board of Directors authorized a stock repurchase program to repurchase up to $10 billion of our common stock from time to time on or prior to December 31, 2022.
Issuer Purchases of Equity Securities In December 2021, our Board of Directors authorized a stock repurchase program to repurchase up to $10 billion of our common stock from time to time through December 31, 2022, which was subsequently extended to December 31, 2023.
A substantially greater number of stockholders are “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions. Unregistered Sales of Equity Securities On August 1, 2022, we issued 9,923 restricted shares of our common stock to one individual in connection with our acquisition of a company.
A substantially greater number of stockholders are “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions.
Removed
The restrictions lapse over three years subject to the individual's continued employment. The issuance of these shares was exempt from registration under the Securities Act of 1933, as amended, in reliance upon Section 4(a)(2) thereof.
Added
We repurchased and retired approximately 9 million and 12 million shares of our common stock for $5,824 million and $7,000 million under these stock repurchase programs during fiscal years 2023 and 2022, respectively. Repurchases under our stock repurchase programs may be effected through a variety of methods, including open market or privately negotiated purchases.
Added
The following table presents details of our various repurchases during the fiscal quarter ended October 29, 2023, pursuant to the May 2022 Authorization.
Added
Period Total Number of Shares Purchased (a) Average Price per Share Total Number of Shares Purchased as Part of Publicly Announced Plan (a) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan (In millions, except per share data) July 31, 2023 - August 27, 2023 0.1 $ 894.78 0.1 $ 7,209 August 28, 2023 - September 24, 2023 — $ — — $ 7,209 September 25, 2023 - October 29, 2023 — (b) $ 861.23 — (b) $ 7,176 Total 0.1 $ 885.52 0.1 _________________________________ (a) We also paid approximately $454 million in employee withholding taxes due upon the vesting of net settled equity awards.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe increase was attributable to the following: • Accounts receivable increased to $2,958 million at October 30, 2022 from $2,071 million at October 31, 2021, primarily due to revenue linearity and less receivables sold through factoring arrangements. • Inventory increased to $1,925 million at October 30, 2022 from $1,297 million at October 31, 2021, primarily to support customer demand and due to higher material costs. • Cash and cash equivalents increased to $12,416 million at October 30, 2022 from $12,163 million at October 31, 2021, primarily due to $16,736 million in net cash provided by operating activities and $1,935 million in proceeds from long-term borrowings, partially offset by $7,032 million of dividend payments, $7,000 million of common stock repurchases, $2,361 million of debt payments, and $1,455 million of employee withholding tax payments related to net settled equity awards. • Other current assets increased to $1,205 million at October 30, 2022 from $1,055 million at October 31, 2021, primarily due to an increase in prepaid taxes, offset in part by a decrease in short-term investments.
Biggest changeThe increase was attributable to the following: • Cash and cash equivalents increased to $14,189 million at October 29, 2023 from $12,416 million at October 30, 2022, primarily due to $18,085 million in net cash provided by operating activities, partially offset by $7,645 million of dividend payments, $5,824 million of common stock repurchases, and $1,861 million of employee withholding tax payments related to net settled equity awards. • Other current liabilities decreased to $3,652 million at October 29, 2023 from $4,412 million at October 30, 2022, primarily due to decreases in contract liabilities and income taxes payable. • Other current assets increased to $1,606 million at October 29, 2023 from $1,205 million at October 30, 2022, primarily due to an increase in contract assets, offset in part by a decrease in prepaid income taxes. • Employee compensation and benefits decreased to $935 million at October 29, 2023 from $1,202 million at October 30, 2022, primarily due to lower variable compensation. • Accounts receivable increased to $3,154 million at October 29, 2023 from $2,958 million at October 30, 2022, primarily due to revenue linearity, offset in part by additional receivables sold through factoring arrangements. 45 Table of Contents These increases in working capital were offset in part by the following: • Current portion of long-term debt increased to $1,608 million at October 29, 2023 from $440 million at October 30, 2022, primarily due to certain debt instruments becoming due within the next twelve months, offset in part by repayments. • Accounts payable increased to $1,210 million at October 29, 2023 from $998 million at October 30, 2022, primarily due to the timing of vendor payments.
Each Multi-Year Equity Award vests on the same basis as four annual grants made March 15 of each year, beginning in fiscal year 2019, with successive four-year vesting periods. We recognize stock-based compensation expense related to the Multi-Year Equity Awards from the grant date through their respective vesting date, ranging from 4 years to 7 years.
Each Multi-Year Equity Award vests on the same basis as four annual grants made on March 15 of each year, beginning in fiscal year 2019, with successive four-year vesting periods. We recognize stock-based compensation expense related to the Multi-Year Equity Awards from the grant date through their respective vesting date, ranging from 4 years to 7 years.
Our actual financial results may differ materially and adversely from our estimates. Our critical accounting policies are those that affect our historical financial statements materially and involve difficult, subjective or complex judgments by management. Those policies include revenue recognition, valuation of goodwill and long-lived assets, and income taxes. See Note 2.
Our actual financial results may differ materially and adversely from our estimates. Our critical accounting policies are those that affect our financial statements materially and involve difficult, subjective or complex judgments by management. Those policies include revenue recognition, valuation of goodwill and long-lived assets, and income taxes. See Note 2.
Our infrastructure software solutions enable customers to plan, develop, automate, manage and secure applications across mainframe, distributed, mobile and cloud platforms. Our portfolio of industry-leading infrastructure and security software is designed to modernize, optimize, and secure the most complex hybrid environments, enabling scalability, agility, automation, insights, resiliency and security.
Our infrastructure software solutions enable customers to plan, develop, automate, manage and secure applications across mainframe, distributed, mobile and cloud platforms. Our portfolio of infrastructure and security software is designed to modernize, optimize, and secure the most complex hybrid environments, enabling scalability, agility, automation, insights, resiliency and security.
Critical Accounting Estimates The preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.
Critical Accounting Estimates The preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods.
We also recognize goodwill, which is not amortized, and in-process research and development (“IPR&D”), which is initially capitalized as an indefinite-lived intangible asset, in connection with the acquisitions. Upon completion of each underlying project, IPR&D assets are reclassified as amortizable purchased intangible assets and amortized over their estimated useful lives. Restructuring, impairment and disposal charges.
We also recognize goodwill, which is not amortized, and in-process research and development (“IPR&D”), which is initially capitalized as an indefinite-lived intangible asset, in connection with the acquisitions. Upon completion of each underlying project, IPR&D assets are reclassified as amortizable purchased intangible assets and amortized over their estimated useful lives. Restructuring and other charges.
Thus, the reversal of unclaimed rebates may have a positive impact on our net revenue and net income in subsequent periods. 38 Table of Contents Valuation of goodwill and long-lived assets. We perform an annual impairment review of our goodwill during the fourth fiscal quarter of each year, and more frequently if we believe indicators of impairment exist.
Thus, the reversal of unclaimed rebates may have a positive impact on our net revenue and net income in subsequent periods. Valuation of goodwill and long-lived assets. We perform an annual impairment review of our goodwill during the fourth fiscal quarter of each year, and more frequently if we believe indicators of impairment exist.
Our overall net revenue, as well as the percentage of total net revenue generated by sales in our semiconductor solutions and infrastructure software segments, have varied from quarter to quarter, due largely to fluctuations in end- 36 Table of Contents market demand, including the effects of seasonality, which are discussed in detail in Part I, Item 1.
Our overall net revenue, as well as the percentage of total net revenue generated by sales in our semiconductor solutions and infrastructure software segments, have varied from quarter to quarter, due largely to fluctuations in end-market demand, including the effects of seasonality, which are discussed in detail in Part I, Item 1.
We believe aggregate sales to our top five end customers, through all channels, accounted for approximately 35% of our net revenue for each of fiscal years 2022 and 2021. We believe aggregate sales to Apple Inc., through all channels, accounted for approximately 20% of our net revenue for each of fiscal years 2022 and 2021.
We believe aggregate sales to our top five end customers, through all channels, accounted for approximately 35% of our net revenue for each of fiscal years 2023 and 2022. We believe aggregate sales to Apple Inc., through all channels, accounted for approximately 20% of our net revenue for each of fiscal years 2023 and 2022.
The corporate income tax rate in Singapore that would otherwise apply to us would be 17%. We also have a tax holiday on our qualifying income in Malaysia, which is scheduled to expire in 2028. Each tax incentive and tax holiday is also subject to our compliance with various operating and other conditions.
The corporate income tax rate in Singapore that would otherwise apply to us would be 17%. We also have a tax holiday from our qualifying income earned in Malaysia, which is scheduled to expire in 2028. Each tax incentive and tax holiday is also subject to our compliance with various operating and other conditions.
Our interpretations and conclusions regarding the tax incentives are not binding on any taxing authority, and if our assumptions about tax and other laws are incorrect or if these tax incentives are substantially modified or rescinded, we could suffer material adverse tax and other financial consequences, which would increase our expenses, reduce our profitability and adversely affect our cash flows.
Our interpretations and conclusions regarding the tax incentives are not binding on any taxing authority, and if our assumptions about tax and other laws are incorrect or if these tax incentives are substantially modified or rescinded, we could suffer material adverse tax and other financial consequences, which would increase our expenses, reduce our profitability and 39 Table of Contents adversely affect our cash flows.
In addition, we may also generate cash from the sale of assets and debt or equity financing from time to time.
In addition, we may also generate cash from the sale of assets and debt or equity financings from time to time.
Such costs include personnel and overhead related to our manufacturing operations, which include stock-based compensation expense, related occupancy, computer services, equipment costs, manufacturing quality, order fulfillment, warranty adjustments, inventory adjustments including write-downs for inventory obsolescence, and acquisition costs, which include direct transaction costs and acquisition-related costs.
Such costs include personnel and overhead related to our manufacturing operations, which include stock-based compensation expense, related occupancy, computer services, equipment costs, manufacturing quality, order fulfillment, warranty adjustments, inventory adjustments 38 Table of Contents including write-downs for inventory obsolescence, and acquisition costs, which include direct transaction costs and acquisition-related costs.
In each of fiscal years 2022 and 2021, approximately 35% of our net revenue came from shipments or deliveries to China (including Hong Kong). However, the end customers for either our products or for the end products into which our products are incorporated, are frequently located in countries other than China (including Hong Kong).
In fiscal years 2023 and 2022, 32% and 35%, respectively, of our net revenue came from shipments or deliveries to China (including Hong Kong). However, the end customers for either our products or for the end products into which our products are incorporated, are frequently located in countries other than China (including Hong Kong).
Our short-term and long-term liquidity requirements primarily arise from: (i) business acquisitions and investments we may make from time to time, including the pending VMware Merger, (ii) working capital requirements, (iii) research and development and capital expenditure needs, (iv) cash dividend payments (if and when declared by our Board of Directors), (v) interest and principal payments related to our $41,218 million of outstanding indebtedness, (vi) share repurchases, and (vii) payment of income taxes.
Our short-term and long-term liquidity requirements primarily arise from: (i) business acquisitions and investments we may make from time to time, (ii) working capital requirements, (iii) research and development and capital expenditure needs, (iv) cash dividend payments (if and when declared by our Board of Directors), (v) interest and principal payments related to our $40,815 million of outstanding indebtedness, (vi) share repurchases, and (vii) payment of income taxes.
Such tenders, exchanges or purchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. Working Capital Working capital increased to $11,452 million at October 30, 2022 from $10,305 million at October 31, 2021.
Such tenders, exchanges or purchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. Working Capital Working capital increased to $13,442 million at October 29, 2023 from $11,452 million at October 30, 2022.
Under the terms of the VMware Merger Agreement, each share of VMware common stock issued and outstanding immediately prior to the effective time of the VMware Merger will be indirectly converted into the right to receive, at the election of the holder of such share of VMware common stock, either $142.50 in cash, without interest, or 0.2520 shares of Broadcom common stock.
Pursuant to the Agreement and Plan of Merger, each share of VMware common stock issued and outstanding immediately prior to the effective time of the VMware Merger was indirectly converted into the right to receive, at the election of the holder of such share of VMware common stock, either $142.50 in cash, without interest, or 0.2520 shares of Broadcom common stock.
A discussion regarding our financial condition and results of operations for fiscal year 2021 compared to our fiscal year ended November 1, 2020 (“fiscal year 2020”) can be found in Part II, Item 7 of our Annual Report on Form 10-K for fiscal year 2021, filed with the Securities and Exchange Commission (the “SEC”) on December 17, 2021.
A discussion regarding our financial condition and results of operations for fiscal year 2022 compared to our fiscal year ended October 31, 2021 (“fiscal year 2021”) can be found in Part II, Item 7 of our Annual Report on Form 10-K for fiscal year 2022, filed with the Securities and Exchange Commission (the “SEC”) on December 16, 2022.
Sales of products to distributors accounted for 56% and 53% of our net revenue for fiscal years 2022 and 2021, respectively. Direct sales to WT Microelectronics Co., Ltd., a distributor, accounted for 20% and 18% of our net revenue for fiscal years 2022 and 2021, respectively.
Sales of products to distributors accounted for 57% and 56% of our net revenue for fiscal years 2023 and 2022, respectively. Direct sales to WT Microelectronics Co., Ltd., a distributor, accounted for 21% and 20% of our net revenue for fiscal years 2023 and 2022, respectively.
Restructuring, impairment and disposal charges consist primarily of compensation costs associated with employee exit programs, alignment of our global manufacturing operations, rationalizing product development program costs, facility and lease abandonments, fixed asset impairment, IPR&D impairment, and other exit costs, including curtailment of service or supply agreements. 37 Table of Contents Interest expense.
Restructuring and other charges consist primarily of non-recurring charges related to IP litigation, compensation costs associated with employee exit programs, alignment of our global manufacturing operations, rationalizing product development program costs, facility and lease abandonments, fixed asset impairment, IPR&D impairment, and other exit costs, including curtailment of service or supply agreements. Interest expense.
The following section generally discusses our financial condition and results of operations for our fiscal year ended October 30, 2022 (“fiscal year 2022”) compared to our fiscal year ended October 31, 2021 (“fiscal year 2021”).
The following section generally discusses our financial condition and results of operations for our fiscal year ended October 29, 2023 (“fiscal year 2023”) compared to our fiscal year ended October 30, 2022 (“fiscal year 2022”).
Tax Cuts and Jobs Act and other indirect tax impacts, the effect of these tax incentives and tax holiday was to decrease the provision for income taxes by approximately $1,821 million and $1,156 million for fiscal years 2022 and 2021, respectively.
Tax Cuts and Jobs Act and other indirect tax impacts, the effect of these tax incentives and tax holiday decreased the provision for income taxes by approximately $2,104 million and $1,821 million for fiscal years 2023 and 2022, respectively.
We may also elect to sell additional debt or equity securities for reasons other than those specified above. In addition, we may, at any time and from time to time, seek to retire or purchase our outstanding debt through cash tenders and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise.
In addition, we may, at any time and from time to time, seek to retire or purchase our outstanding debt through cash tenders and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise.
The financial statements included in Part II, Item 8. of this Annual Report on Form 10-K are presented in accordance with GAAP and expressed in U.S. dollars. 40 Table of Contents Results of Operations Fiscal Year 2022 Compared to Fiscal Year 2021 The following table sets forth our results of operations for the periods presented: Fiscal Year Ended October 30, 2022 October 31, 2021 October 30, 2022 October 31, 2021 (In millions) (As a percentage of net revenue) Statements of Operations Data: Net revenue: Products $ 26,277 $ 20,886 79 % 76 % Subscriptions and services 6,926 6,564 21 24 Total net revenue 33,203 27,450 100 100 Cost of revenue: Cost of products sold 7,629 6,555 23 24 Cost of subscriptions and services 627 607 2 2 Amortization of acquisition-related intangible assets 2,847 3,427 8 13 Restructuring charges 5 17 — — Total cost of revenue 11,108 10,606 33 39 Gross margin 22,095 16,844 67 61 Research and development 4,919 4,854 15 18 Selling, general and administrative 1,382 1,347 4 5 Amortization of acquisition-related intangible assets 1,512 1,976 5 7 Restructuring, impairment and disposal charges 57 148 — — Total operating expenses 7,870 8,325 24 30 Operating income $ 14,225 $ 8,519 43 % 31 % Net Revenue A relatively small number of customers account for a significant portion of our net revenue.
The financial statements included in Part II, Item 8. of this Annual Report on Form 10-K are presented in accordance with GAAP and expressed in U.S. dollars. 41 Table of Contents Results of Operations Fiscal Year 2023 Compared to Fiscal Year 2022 The following table sets forth our results of operations for the periods presented: Fiscal Year Ended October 29, 2023 October 30, 2022 October 29, 2023 October 30, 2022 (In millions) (As a percentage of net revenue) Statements of Operations Data: Net revenue: Products $ 27,891 $ 26,277 78 % 79 % Subscriptions and services 7,928 6,926 22 21 Total net revenue 35,819 33,203 100 100 Cost of revenue: Cost of products sold 8,636 7,629 24 23 Cost of subscriptions and services 636 627 2 2 Amortization of acquisition-related intangible assets 1,853 2,847 5 8 Restructuring charges 4 5 — — Total cost of revenue 11,129 11,108 31 33 Gross margin 24,690 22,095 69 67 Research and development 5,253 4,919 15 15 Selling, general and administrative 1,592 1,382 4 4 Amortization of acquisition-related intangible assets 1,394 1,512 4 5 Restructuring and other charges 244 57 1 — Total operating expenses 8,483 7,870 24 24 Operating income $ 16,207 $ 14,225 45 % 43 % Net Revenue A relatively small number of customers account for a significant portion of our net revenue.
The stockholder election will be subject to proration, such that the total number of shares of VMware common stock entitled to receive cash and the total number of shares of VMware common stock entitled to receive Broadcom common stock, will, in each case, be equal to 50% of the aggregate number of shares of VMware common stock issued and outstanding immediately prior to the effective time of the VMware Merger.
The stockholder election was prorated, such that the total number of shares of VMware common stock entitled to receive cash and the total number of shares of VMware common stock entitled to receive Broadcom common stock, in each case, was equal to 50% of the aggregate number of shares of VMware common stock issued and outstanding.
Our primary sources of liquidity as of October 30, 2022 consisted of: (i) $12,416 million in cash and cash equivalents, (ii) cash we expect to generate from operations and (iii) available capacity under our $7.5 billion unsecured revolving credit 43 Table of Contents facility (the “Revolving Facility”).
Our primary sources of liquidity as of October 29, 2023 consisted of: (i) $14,189 million in cash and cash equivalents, (ii) cash we expect to generate from operations and (iii) available capacity under our $7.5 billion unsecured revolving credit facility.
As a result, we believe that a substantially smaller percentage of our net revenue is ultimately dependent on sales of either our product or our customers’ product incorporating our product, to end customers located in China (including Hong Kong). 41 Table of Contents The following tables set forth net revenue by segment for the periods presented: Fiscal Year Ended Net Revenue by Segment October 30, 2022 October 31, 2021 $ Change % Change (In millions, except percentages) Semiconductor solutions $ 25,818 $ 20,383 $ 5,435 27 % Infrastructure software 7,385 7,067 318 4 % Total net revenue $ 33,203 $ 27,450 $ 5,753 21 % Fiscal Year Ended Net Revenue by Segment October 30, 2022 October 31, 2021 (As a percentage of net revenue) Semiconductor solutions 78 % 74 % Infrastructure software 22 26 Total net revenue 100 % 100 % Net revenue from our semiconductor solutions segment increased due to strong product demand, primarily for networking, server storage and broadband products, as well as higher demand for our wireless content in mobile devices.
As a result, we believe that a substantially smaller percentage of our net revenue is ultimately dependent on sales of either our product or our customers’ product incorporating our product, to end customers located in China (including Hong Kong). 42 Table of Contents The following tables set forth net revenue by segment for the periods presented: Fiscal Year Ended Net Revenue by Segment October 29, 2023 October 30, 2022 $ Change % Change (In millions, except percentages) Semiconductor solutions $ 28,182 $ 25,818 $ 2,364 9 % Infrastructure software 7,637 7,385 252 3 % Total net revenue $ 35,819 $ 33,203 $ 2,616 8 % Fiscal Year Ended Net Revenue by Segment October 29, 2023 October 30, 2022 (As a percentage of net revenue) Semiconductor solutions 79 % 78 % Infrastructure software 21 22 Total net revenue 100 % 100 % Net revenue from our semiconductor solutions segment increased due to strong product demand, primarily for networking, server storage and broadband products.
Cash Flows Fiscal Year Ended October 30, 2022 October 31, 2021 (In millions) Net cash provided by operating activities $ 16,736 $ 13,764 Net cash used in investing activities (667) (245) Net cash used in financing activities (15,816) (8,974) Net change in cash and cash equivalents $ 253 $ 4,545 Operating Activities Cash provided by operating activities consisted of net income adjusted for certain non-cash and other items and changes in assets and liabilities.
Cash Flows Fiscal Year Ended October 29, 2023 October 30, 2022 (In millions) Net cash provided by operating activities $ 18,085 $ 16,736 Net cash used in investing activities (689) (667) Net cash used in financing activities (15,623) (15,816) Net change in cash and cash equivalents $ 1,773 $ 253 Operating Activities Cash flows from operating activities consisted of net income adjusted for certain non-cash and other items and changes in assets and liabilities.
A reporting unit's carrying value represents the assignment of various assets and liabilities, excluding certain corporate assets and liabilities, such as cash and debt. We assess the impairment of long-lived assets, including purchased IPR&D, property, plant and equipment, and intangible assets, whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable.
We assess the impairment of long-lived assets, including purchased IPR&D, property, plant and equipment, right-of-use assets, and intangible assets, whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable.
The $422 million increase in cash used in investing activities for fiscal year 2022 compared to fiscal year 2021 was primarily due to a $238 million increase in cash paid for acquisitions and $169 million lower net proceeds from sales of investments.
The $22 million increase in cash used in investing activities for fiscal year 2023 compared to fiscal year 2022 was primarily due to a $118 million increase in purchases of investments, net of proceeds from sales of investments, offset by a $193 million decrease in cash paid for acquisitions.
Net revenue from our infrastructure software segment increased primarily due to higher demand for our mainframe solutions and FC SAN products. Gross Margin Gross margin was $22,095 million, or 67% of net revenue, for fiscal year 2022, compared to $16,844 million, or 61% of net revenue, for fiscal year 2021.
Net revenue from our infrastructure software segment increased primarily due to increases in sales from our mainframe solutions, partially offset by lower demand for our FC SAN products. Gross Margin Gross margin was $24,690 million, or 69% of net revenue, for fiscal year 2023, compared to $22,095 million, or 67% of net revenue, for fiscal year 2022.
Operating income from our infrastructure software segment increased primarily due to higher demand for our mainframe solutions and FC SAN products. Unallocated expenses include amortization of acquisition-related intangible assets; stock-based compensation expense; restructuring, impairment and disposal charges; acquisition-related costs; and other costs that are not used in evaluating the results of, or in allocating resources to, our segments.
Unallocated expenses include amortization of acquisition-related intangible assets; stock-based compensation expense; restructuring and other charges; acquisition-related costs; and other costs that are not used in evaluating the results of, or in allocating resources to, our segments.
The COVID-19 pandemic and macroeconomic uncertainties may cause our net revenue to fluctuate significantly and impact our results of operations.
In addition, the macroeconomic environment remains uncertain and may cause our net revenue to fluctuate significantly and impact our results of operations.
Fiscal Year Highlights Highlights during fiscal year 2022 include the following: • We generated $16,736 million of cash from operations. • We paid $7,032 million in cash dividends. • We repurchased $7,000 million of common stock. Pending Acquisition of VMware, Inc.
Fiscal Year Highlights Highlights during fiscal year 2023 include the following: • We generated $18,085 million of cash from operations. • We paid $7,645 million in cash dividends. • We repurchased $5,824 million of common stock. 37 Table of Contents Acquisition of VMware, Inc.
We believe that our cash and cash equivalents on hand, cash flows from operations, and the Revolving Facility, as well as the committed debt funding related to the pending VMware Merger, will provide sufficient liquidity to operate our business and fund our current and assumed obligations for at least the next 12 months.
We believe that our cash and cash equivalents on hand, cash flows from operations, and the revolving credit facility will provide sufficient liquidity to operate our business and fund our current and assumed obligations for at least the next 12 months. For additional information regarding our cash requirement from contractual obligations, indebtedness and lease obligations, see Note 13.
Unallocated expenses decreased 18% in fiscal year 2022, compared to the prior fiscal year, primarily due to lower amortization of acquisition-related intangible assets. Non-Operating Income and Expenses Interest expense. Interest expense was $1,737 million and $1,885 million for fiscal years 2022 and 2021, respectively. The decrease was primarily due to lower losses on extinguishment of debt.
Unallocated expenses decreased 2% in fiscal year 2023, compared to the prior fiscal year, primarily due to lower amortization of acquisition-related intangible assets, substantially offset by higher stock-based compensation expense, non-recurring charges related to IP litigation, and acquisition-related costs. Non-Operating Income and Expenses Interest expense. Interest expense was $1,622 million and $1,737 million for fiscal years 2023 and 2022, respectively.
Segment Operating Results Fiscal Year Ended Operating Income by Segment October 30, 2022 October 31, 2021 $ Change % Change (In millions, except percentages) Semiconductor solutions $ 15,075 $ 10,976 $ 4,099 37 % Infrastructure software 5,219 4,936 283 6 % Unallocated expenses (6,069) (7,393) 1,324 (18) % Total operating income $ 14,225 $ 8,519 $ 5,706 67 % Operating income from our semiconductor solutions segment increased primarily due to higher net revenue from networking, server storage, broadband, and wireless products, as well as higher gross margin.
Segment Operating Results Fiscal Year Ended Operating Income by Segment October 29, 2023 October 30, 2022 $ Change % Change (In millions, except percentages) Semiconductor solutions $ 16,486 $ 15,075 $ 1,411 9 % Infrastructure software 5,639 5,219 420 8 % Unallocated expenses (5,918) (6,069) 151 (2) % Total operating income $ 16,207 $ 14,225 $ 1,982 14 % Operating income from our semiconductor solutions segment increased primarily due to higher net revenue from networking, server storage, and broadband products.
We withheld approximately 3 million shares of common stock from employees in connection with such net share settlements during each of fiscal years 2022 and 2021.
During fiscal years 2023 and 2022, we paid approximately $1,861 million and $1,455 million, respectively, in employee withholding taxes due upon the vesting of net settled equity awards. We withheld approximately 3 million shares of common stock from employees in connection with such net share settlements during each of fiscal years 2023 and 2022.
The decrease was primarily due to lower amortization of certain intangible assets from our acquisition of CA, Inc. Restructuring, Impairment and Disposal Charges Restructuring, impairment and disposal charges recognized in operating expenses decreased $91 million, or 61%, in fiscal year 2022, compared to the prior fiscal year .
Amortization of Acquisition-Related Intangible Assets Amortization of acquisition-related intangible assets recognized in operating expenses decreased $118 million, or 8%, in fiscal year 2023, compared to the prior fiscal year. The decrease was primarily due to lower amortization of customer-related intangible assets from our acquisition of LSI Corporation.
If the payment of these amounts ultimately proves to be unnecessary, the reversal of the accrued liabilities would result in tax benefits being recognized in the period when we determine the liabilities no longer exist. 39 Table of Contents Fiscal Year Presentation We operate on a 52- or 53-week fiscal year ending on the Sunday closest to October 31 in a 52-week year and the first Sunday in November in a 53-week year.
If the payment of these amounts ultimately proves to be unnecessary, the reversal of the accrued liabilities would result in tax benefits being recognized in the period when we determine the liabilities no longer exist.
Other expense, net, was $54 million for fiscal year 2022, compared to other income, net, of $131 million for fiscal year 2021. The change was primarily due to changes in investment gains or losses. Provision for income taxes. The provision for income taxes was $939 million and $29 million for fiscal years 2022 and 2021, respectively.
The change was primarily due to higher interest income as a result of higher interest rates and changes in investment gains or losses. Provision for income taxes. The provision for income taxes was $1,015 million and $939 million for fiscal years 2023 and 2022, respectively.
During fiscal year 2022, we repurchased and retired approximately 12 million shares of our common stock for $7 billion under this stock repurchase program. In May 2022, our Board of Directors authorized another stock repurchase program to repurchase up to an additional $10 billion of our common stock from time to time through December 31, 2023.
In May 2022, our Board of Directors authorized another stock repurchase program to repurchase up to an additional $10 billion of our common stock from time to time through December 31, 2023. As of October 29, 2023, $7,176 million of the authorized amount remained available for repurchases.
The increase was primarily due to higher income from continuing operations before income taxes. Liquidity and Capital Resources The following section discusses our principal liquidity and capital resources as well as our primary liquidity requirements and uses of cash.
The increase was primarily due to higher income before income taxes, partially offset by an increase in the recognition of uncertain tax benefits as a result of lapses of statutes of limitations. 44 Table of Contents Liquidity and Capital Resources The following section discusses our principal liquidity and capital resources as well as our primary liquidity requirements and uses of cash.
We expect capital expenditures to be higher in fiscal year 2023 as compared to fiscal year 2022. Our debt and liquidity needs will increase as a result of the pending VMware Merger, and we intend to fund the cash portion of the consideration with $32 billion in new, fully committed debt financing.
We expect capital expenditures to be higher in fiscal year 2024 as compared to fiscal year 2023. Our debt and liquidity needs increased as a result of completing the VMware Merger.
The following table sets forth the total unrecognized compensation cost related to unvested stock-based awards outstanding and expected to vest as of October 30, 2022, which we expect to recognize over the remaining weighted-average service period of 2.7 years. 42 Table of Contents Fiscal Year: Unrecognized Compensation Cost, Net of Expected Forfeitures (In millions) 2023 $ 1,221 2024 846 2025 507 2026 130 Total $ 2,704 During the first quarter of fiscal year ended November 3, 2019 (“fiscal year 2019”), our Compensation Committee approved a broad-based program of multi-year equity grants of time- and market-based RSUs (the “Multi-Year Equity Awards”) in lieu of our annual employee equity awards historically granted on March 15 of each year.
Fiscal Year: Unrecognized Compensation Cost, Net of Expected Forfeitures (In millions) 2024 $ 2,279 2025 1,845 2026 1,407 2027 715 2028 129 Total $ 6,375 During the first quarter of fiscal year ended November 3, 2019 (“fiscal year 2019”), our Compensation Committee approved a broad-based program of multi-year equity grants of time- and market-based RSUs (the “Multi-Year Equity Awards”) in lieu of our annual employee equity awards historically granted on March 15 of each year.
If we do not have sufficient cash to fund our operations or finance growth opportunities, including acquisitions, or unanticipated capital expenditures, our business and financial condition could suffer. In such circumstances, we may seek to obtain new debt or equity financing.
Any such transaction, or evaluation of potential transactions, could require significant use of our cash and cash equivalents, or require us to increase our borrowings to fund such transactions. If we do not have sufficient cash to fund our operations or finance growth opportunities, including acquisitions, or unanticipated capital expenditures, our business and financial condition could suffer.
All outstanding in-the-money VMware stock options and RSU awards held by non-employee directors will be accelerated and converted into the right to receive cash and shares of Broadcom common stock, in equal parts.
All outstanding in-the-money VMware stock options and RSU awards held by non-employee directors were accelerated and converted into the right to receive cash and shares of Broadcom common stock, in equal parts. VMware was a leading provider of multi-cloud services for all applications, enabling digital innovation with enterprise control. We acquired VMware to enhance our infrastructure software capabilities.
Repurchases under our stock repurchase programs may be effected through a variety of methods, including open market or privately negotiated purchases. The timing and amount of shares repurchased will depend on the stock price, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, acquisition opportunities, and other factors.
The timing and amount of shares repurchased will depend on the stock price, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, acquisition opportunities, and other factors. We are not obligated to repurchase any specific amount of shares of common stock, and the stock repurchase programs may be suspended or terminated at any time.
We expect to incur additional interest expense in future periods as a result of indebtedness associated with the pending VMware Merger. Other income (expense), net. Other income (expense), net, includes interest income, gains or losses on investments, foreign currency remeasurement and other miscellaneous items.
The decrease was due to losses on extinguishment of debt related to debt transactions incurred in fiscal year 2022. We expect to incur additional interest expense in future periods as a result of indebtedness associated with the VMware Merger. Other income (expense), net.
We will assume all outstanding VMware restricted stock unit (“RSU”) awards and performance stock unit awards held by continuing employees. The assumed awards will be converted into RSU awards for shares of Broadcom common stock.
Based on the VMware stockholders’ elections, the VMware stockholders received approximately $30.8 billion in cash and 54.4 million shares of Broadcom common stock in aggregate. We assumed all outstanding VMware restricted stock unit (“RSU”) awards and performance stock unit awards held by continuing employees. The assumed awards were converted into approximately 5 million Broadcom RSU awards.
The $6,842 million increase in cash used in financing activities for fiscal year 2022 compared to fiscal year 2021 was primarily 45 Table of Contents due to $7,000 million in common stock repurchases, a $820 million increase in dividend payments, and a $156 million increase in employee withholding tax payments related to net settled equity awards, offset in part by a $1,165 million change in net borrowing activities.
The $193 million decrease in cash used in financing activities for fiscal year 2023 compared to fiscal year 2022 was primarily due to a $1,958 million decrease in payments on debt obligations and a $1,176 million decrease in stock repurchases, offset by a $1,935 million decrease in proceeds from long-term borrowings, a $613 million increase in dividend payments and a $406 million increase in employee withholding tax payments related to net settled equity awards.
The increase was primarily due to lower amortization of acquisition-related intangible assets, mainly from our 2016 acquisition of Broadcom Corporation and, to a lesser extent, favorable margin within our semiconductor solutions segment. Research and Development Expense Research and development expense increased $65 million, or 1%, in fiscal year 2022, compared to the prior fiscal year.
The increase was primarily due to lower amortization of acquisition-related intangible assets, mainly from our 2016 acquisition of Broadcom Corporation, partially offset by less favorable margin within our semiconductor solutions segment driven by product mix.
However, we cannot assure you that such additional financing will be available on terms acceptable to us or at all. Our ability to service our senior unsecured notes and any other indebtedness we may incur will depend on our ability to generate cash in the future.
In such circumstances, we may seek to obtain new debt or equity financing. However, we cannot assure you that such additional financing will be available on terms acceptable to us or at all.
Capital Returns Fiscal Year Ended Cash Dividends Declared and Paid October 30, 2022 October 31, 2021 (In millions, except per share data) Dividends per share to common stockholders $ 16.40 $ 14.40 Dividends to common stockholders $ 6,733 $ 5,913 Dividends per share to preferred stockholders $ 80.00 $ 80.00 Dividends to preferred stockholders $ 299 $ 299 In December 2021, our Board of Directors authorized a stock repurchase program to repurchase up to $10 billion of our common stock from time to time on or prior to December 31, 2022.
Capital Returns Fiscal Year Ended Cash Dividends Declared and Paid October 29, 2023 October 30, 2022 (In millions, except per share data) Dividends per share to common stockholders $ 18.40 $ 16.40 Dividends to common stockholders $ 7,645 $ 6,733 Dividends per share to preferred stockholders $ — $ 80.00 Dividends to preferred stockholders $ — $ 299 On September 30, 2019, we issued approximately 4 million shares of 8.00% Mandatory Convertible Preferred Stock, Series A, $0.001 par value per share.
The increase was primarily due to higher variable employee compensation expense and engineering project costs, partially offset by lower stock-based compensation expense reflecting the full vesting of certain equity awards and the effects of forfeitures. Selling, General and Administrative Expense Selling, general and administrative expense increased $35 million, or 3%, in fiscal year 2022, compared to the prior fiscal year.
The increase was primarily due to higher stock-based compensation expense as a result of annual employee equity awards granted at higher grant-date fair values in fiscal year 2023, partially offset by lower variable employee compensation expense.
The $2,972 million increase in cash provided by operations during fiscal year 2022 compared to fiscal year 2021 was due to $4,759 million higher net income and certain non-cash adjustments including deferred taxes and other non-cash taxes, offset by a decrease in amortization of intangible assets and stock-based compensation, as well as a $1,527 million decrease resulting from changes in operating assets and liabilities.
The $1,349 million increase in cash provided by operations during fiscal year 2023 compared to fiscal year 2022 was due to $2,587 million higher net income, offset in part by $1,249 million lower non-cash adjustments primarily from lower amortization of intangible assets. 46 Table of Contents Investing Activities Cash flows from investing activities primarily consisted of capital expenditures, sales and purchases of investments, and cash used for acquisitions.
For additional information regarding our cash requirement from contractual obligations, indebtedness and lease obligations, see Note 14. “Commitments and Contingencies”, Note 10. “Borrowings” and Note 6. “Leases” in Part II, Item 8 of this Annual Report on Form 10-K.
“Commitments and Contingencies”, Note 9. “Borrowings” and Note 5. “Leases” in Part II, Item 8 of this Annual Report on Form 10-K. From time to time, we engage in discussions with third parties regarding potential acquisitions of, or investments in, businesses, technologies and product lines.
Removed
COVID-19 Update The COVID-19 pandemic and the efforts to control it disrupted, and reduced the efficiency of, normal business activities in much of the world.
Added
On November 22, 2023, we completed the acquisition of VMware in a cash-and-stock transaction (the “VMware Merger”).
Removed
The pandemic resulted in authorities around the world implementing numerous unprecedented measures that created supply chain and market disruption, impacting our workforce and operations, and those of our customers, contract manufacturers, suppliers and logistics providers. 35 Table of Contents While the demand environment for our semiconductor products was consistent with our expectations for fiscal year 2022, with robust and increased profitability driven by the supply imbalance, the macroeconomic environment remains uncertain and it may not be sustainable over the longer term.
Added
The preliminary purchase consideration for the VMware Merger was approximately $86.3 billion. We funded the cash portion of the VMware Merger with net proceeds from the issuance of $30.4 billion in term loans under a credit agreement that we entered into on August 15, 2023 (the “2023 Credit Agreement”), as well as cash on hand. See Note 15.
Removed
We continue to experience various constraints in our supply chain, including with respect to wafers and substrates. Although supply lead times have stabilized, we continue to have difficulties in obtaining some necessary components and inputs in a timely manner to meet demand.
Added
“Subsequent Events” included in Part II, Item 8 of this Annual Report on Form 10-K for additional information. The discussions below related to our business and financial results for fiscal year 2023 and prior periods do not include any impact from or information relating to the VMware Merger.
Removed
In response to the pandemic, we have taken extensive measures to protect the health and safety of our employees and contractors at our facilities. We continue to monitor the implications of the pandemic on our operations and may modify our business practices and policies from time to time.
Added
A reporting unit's 40 Table of Contents carrying value represents the assignment of various assets and liabilities, excluding certain corporate assets and liabilities, such as cash and debt.
Removed
Our ability to predict the impact of the pandemic on our business remains limited and its effects on our business are unlikely to be fully realized, or reflected in our financial results, until future periods.
Added
Fiscal Year Presentation We operate on a 52- or 53-week fiscal year ending on the Sunday closest to October 31 in a 52-week year and the first Sunday in November in a 53-week year. Our fiscal years 2023, 2022 and 2021 each consisted of 52 weeks.
Removed
On May 26, 2022, we entered into an Agreement and Plan of Merger (the “VMware Merger Agreement”) to acquire all of the outstanding shares of VMware, Inc. (“VMware”) in a cash-and-stock transaction (the “VMware Merger”) that values VMware at approximately $61 billion, based on the closing price of Broadcom common stock on May 25, 2022.
Added
We expect to incur additional amortization of acquisition-related intangible assets in future periods as a result of the VMware Merger and any further acquisitions we may make. Research and Development Expense Research and development expense increased $334 million, or 7%, in fiscal year 2023, compared to the prior fiscal year.
Removed
We will also assume VMware’s closing date outstanding debt, net of expected cash.
Added
We expect to incur additional research and development expense in future periods as a result of the VMware Merger and any further acquisitions we may make. Selling, General and Administrative Expense Selling, general and administrative expense increased $210 million, or 15%, in fiscal year 2023, compared to the prior fiscal year.
Removed
Effective upon the effective time of the VMware Merger, one member of the VMware Board of Directors, to be mutually agreed by us and VMware, will be added to our Board of Directors.
Added
The increase was primarily due to higher costs incurred in connection with the VMware Merger and higher stock-based compensation expense as a result of annual employee equity awards granted at higher grant-date fair values in fiscal year 2023, partially offset by lower variable employee compensation expense.
Removed
In connection with the execution of the VMware Merger Agreement, we entered into a commitment letter on May 26, 2022, with certain financial institutions that committed to provide, subject to the terms and conditions of the commitment letter, a senior unsecured bridge facility in an aggregate principal amount of $32 billion.
Added
We expect to incur additional amortization of acquisition-related intangible assets in future periods as a result of the VMware Merger and any further acquisitions we may make. Restructuring and Other Charges Restructuring and other charges in fiscal year 2023 primarily included non-recurring charges related to IP litigation.
Removed
The VMware Merger, which is expected to be completed in our fiscal year ending October 29, 2023 (“fiscal year 2023”), is subject to satisfaction or waiver of customary closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and clearance under the antitrust laws of the European Union and certain other jurisdictions.
Added
We expect to incur additional restructuring and other charges in future periods as a result of the VMware Merger and any further acquisitions we may make. Stock-Based Compensation Expense Total stock-based compensation expense was $2,171 million and $1,533 million for fiscal years 2023 and 2022, respectively.
Removed
On October 3, 2022, we registered approximately 59 million shares of our common stock. On November 4, 2022, VMware stockholders adopted the VMware Merger Agreement.
Added
The increase was primarily due to annual employee equity awards granted at higher grant-date fair values in fiscal year 2023.
Removed
We and VMware each have termination rights under the VMware Merger Agreement and, under specified circumstances, upon termination of the agreement, we and VMware would be required to pay the other a termination fee of $1.5 billion.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of October 30, 2022, a hypothetical 50 basis points increase or decrease in market interest rates would change the fair value of debt by a decrease or increase of approximately $1.6 billion. However, this hypothetical change in interest rates would not impact the interest expense on our debt as we only had fixed rate senior notes outstanding.
Biggest changeAs of October 29, 2023 and October 30, 2022, a hypothetical 50 basis points increase or decrease in market interest rates would change the fair value of debt by a decrease or increase of approximately $1.4 billion and $1.6 billion, respectively.
To hedge variability of cash flows due to changes in the benchmark interest rate of anticipated future debt issuances, we have entered, and in the future may enter, into treasury rate lock contracts. 46 Table of Contents
To hedge variability of cash flows due to changes in the benchmark interest rate of anticipated future debt issuances, we have entered, and in the future may enter, into treasury rate lock contracts. 47 Table of Contents
Gains and losses from foreign currency transactions, as well as foreign exchange forward contracts, were not significant for any period presented in the consolidated financial statements included in this Form 10-K. As of October 30, 2022, we did not have any outstanding foreign exchange forward contracts.
Neither gains and losses from foreign currency transactions nor foreign exchange forward contracts were significant for any period presented in the consolidated financial statements included in this Form 10-K. We did not have any outstanding foreign exchange forward contracts as of October 29, 2023 or October 30, 2022.
Interest Rate Risk Changes in interest rates affect the fair value of our outstanding debt. As of October 30, 2022, we had $41.2 billion in principal amount of debt outstanding. The carrying amount of the debt was $39.5 billion, and the estimated aggregate fair value of debt was $33.0 billion.
Interest Rate Risk Changes in interest rates affect the fair value of our outstanding debt. As of October 29, 2023 and October 30, 2022, we had $40.8 billion and $41.2 billion in principal amount of debt outstanding, and the estimated aggregate fair value of debt was $33.2 billion and $33.0 billion, respectively.
Added
However, this hypothetical change in interest rates would not impact the interest expense on our debt as we only had fixed rate senior notes outstanding.

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